Corporate Responsibility Progress Report G4-17, G4-28

2015 Corporate Responsibility Progress Report G4-17, G4-28

About this Report This is Altria’s fifth annual Corporate Responsibility Progress Report. Our last report was published in May 2014.

Unless otherwise noted, this report includes data and progress for Altria Group Inc. and its wholly- owned subsidiaries for calendar year 2015. It covers Altria’s tobacco companies Philip Morris USA Inc., John Middleton Co., U.S. Smokeless Tobacco Company LLC and Nu Mark LLC, and wine company, Ste. Michelle Wine Estates Ltd. Other Altria subsidiaries in the report scope include Altria Group Dis- tribution Company, which provides sales, distribution and consumer engagement support to certain Altria operating companies, and Altria Client Services LLC, which provides services such as legal, regulatory, procurement, human resources and external affairs to Altria’s companies. Philip Morris Capital Corporation, Altria’s subsidiary which maintains a portfolio of finance assets, is not in scope. Altria’s companies operate principally in the United States and substantially all of Altria Group’s net revenues are from sales generated in the United States.

This report is guided by Global Reporting Initiative (GRI), the leading sustainability reporting framework. It is in accordance with GRI G4 Core Option. Informed by stakeholders’ perspectives, the content is focused on Altria’s four responsibility priorities: Reducing the Harm of Tobacco Products, Marketing Responsibly, Managing Our Supply Chain Responsibly and Developing Our Employees and Culture. We share progress on other responsibility topics, including how we’re working to minimize our environmental impact, on our website, Altria.com.

Certain environmental data presented in our GRI G4 Content Index have been assured by an independent third party. See Appendix A for the assurance statement.

If you have questions about our report, please feel free to Contact Us. Table of Contents Section 1: Chairman’s Letter Our Progress on Responsibility Altria’s Responsibility Priorities and Goals Corporate Profile Our Approach

Section 2: Reducing the Harm of Tobacco Products

Section 3: Marketing Responsibly

Section 4: Managing Our Supply Chain Responsibly

Section 5: Developing Our Employees and Culture

Section 6: Appendix A: Environmental Assurance Letter Appendix B: Stakeholder Engagement Appendix C: Analysis of Material Topics

Section 7: GRI G4 Content Index

1 Altria: 2015 Corporate Responsibility Progress Report | Table of Contents G4-1 Our Mission is to own and develop financially disciplined Chairman’s Letter businesses that Welcome to our 2015 Corporate Responsibility Progress Report. 2015 was another are leaders in strong year for Altria and we made considerable progress against our responsibility responsibly priorities. providing adult Altria has a rich heritage of marketplace leadership and financial strength. That success is grounded in our culture and how we operate. We take a long-term approach to tobacco and wine responsibly managing our businesses. In fact, Altria is one of just 57 companies consumers with included on each Fortune 500 list since it began more than 60 years ago. superior branded Our track record of success continued in 2015. Altria delivered a total shareholder return of 23.1 percent far exceeding the S&P 500 return of 1.4 percent. We increased our products. dividend for the 49th time in 46 years, paying shareholders nearly $4.2 billion. Philip Morris USA’s Marlboro achieved a retail share of 44.0 percent, extending its leadership position in the U.S. cigarette category to 39 consecutive years. U.S. Smokeless Tobacco Company’s Copenhagen and Skoal, with a combined retail share of 51.3 percent, are the two leading premium brands in the U.S. smokeless products category.

How we achieved these results is as important as what we achieved. Responsibility is core to our Mission and Values, which guide us. We work to understand our stakeholders and actively participate in resolving societal concerns relevant to our businesses. Responsibility both mitigates risk and identifies opportunities to create value for our consumers, employees, business partners, neighbors and shareholders. When we operate with our diverse stakeholders in mind, we’re strengthening our businesses for the future.

Martin J. Barrington Engaging with stakeholders and understanding the external environment inform our business strategies. Stakeholder expectations and the marketplace continue to Altria Group, Inc. change. Adult tobacco consumer preferences are changing, and many are seeking Chairman, CEO and President innovative alternatives to traditional tobacco products. Our two largest competitors have merged. The regulatory environment evolves. Expectations for our businesses are diverse.

We have identified four responsibility priorities that are important to our stakeholders and key to our continued success: Reducing the Harm of Tobacco Products, Marketing Responsibly, Managing Our Supply Chain Responsibly and Developing Our Employ- ees and Culture. These priorities and the goals that we have articulated within them represent some of the greatest opportunities and challenges ahead of us. We’re making progress and plan to focus on these areas over the next several years.

2 Altria: 2015 Corporate Responsibility Progress Report | Chairman’s Letter Responsibility is not just about mitigating risk. It’s also about seizing opportunities Here are a few highlights: that create value for Reducing the Harm of Tobacco Products. For many years, we have pursued our consumers, a vision of developing lower-risk tobacco products that appeal to adult tobacco consumers and about which accurate health information could be communicated employees, business to adult consumers. To help realize this vision, for nearly 10 years we advocated for legislation to implement U.S. Food and Drug Administration (FDA) regulation of partners, neighbors tobacco products. Under the now-enacted regulation, our companies are developing a portfolio of products that can potentially reduce the risk of tobacco- and shareholders. related disease and the science and evidence to assess that potential. This is an important opportunity for our businesses and adult tobacco consumers.

Marketing Responsibly. Our companies responsibly build connections for their brands with their adult consumers while taking steps designed to limit reach to unintended audiences. Applying this principle, for example, Philip Morris USA innovated to expand its age-verified, one-to-one digital communications by offering a mobile app for Marlboro.

Managing Our Supply Chain Responsibly. We seek diverse, high-quality suppliers and work with them to reduce risk and address societal issues within the supply chain. We continue to support enhancing farm safety and labor practices. Following a successful pilot in 2014, we helped lead a multi-stakeholder initiative that delivered advanced training on labor management topics to almost 10,000 growers in 2015. We also launched a pilot program to better assess compliance within our domestic tobacco supply chain, including worker interviews.

Developing Our Employees and Culture. Our companies compete in a dynamic and evolving marketplace so providing an unbeatable employee experience is important. Our initiatives to strengthen our culture of diversity and inclusion, innovation and simplification have gained momentum. The results so far have been encouraging. Our employees redesigned more than 100 processes, saving thousands of hours of work; we’ve defined key behaviors to drive innovation and provided tools and workshops for employees; and we’ve launched enterprise-wide diversity and inclusion training.

While we closely monitor our progress, we appreciate when others recognize our work. For the fifth consecutive year, Corporate Responsibility Magazine named Altria one of the 100 Best Corporate Citizens. Forbes named Altria among its top 100 list of America’s Best Employers.

The Executive Leadership Team and I are proud of what our employees achieved last year and equally proud of how they achieved those results. We have more work to do, and I look forward to sharing our 2016 progress with you next year.

Marty Barrington

3 Altria: 2015 Corporate Responsibility Progress Report | Chairman’s Letter Our Progress on Responsibility While change is constant and vital to maintaining our leadership position in a dynamic industry, our approach to responsibility is consistent. We focus on listening to stakeholders, adjusting business practices and communicating progress.

2015 was an important year for our corporate responsibility strategy. We continued to monitor external expectations, benchmark our performance and identify best practices. We shared this information with our internal business colleagues and engaged them on ways to improve practices and communications.

We put what we’ve learned to work and achieved the following:

Jennifer L. Hunter • Identified our responsibility priorities. Stakeholders want to know where Altria Client Services we focus and why. We identified four responsibility priorities based on our Senior Vice President, 2014 materiality assessment and focused our efforts to improve in these Communications & Corporate areas. Citizenship • Articulated goals and metrics. Stakeholders also want to know what we are trying to achieve and how we measure our progress. We have articulated longer-term goals for our responsibility priorities. We aligned these goals with our materiality assessment and Mission framework. For each goal, we defined metrics to track and report our progress.

• Improved and simplified our reporting. We aligned our fifth annual corporate responsibility report to meet Global Reporting Initiative G4 - Core Option certification requirements, and we focused the content on our priorities. Interested readers can learn more about our progress on other responsibility topics by visiting Altria.com.

Our businesses have been highly engaged on this work. Although more work remains, they have made good progress addressing each priority and are positioned for continued progress.

Thank you for your interest in our report.

Jennifer Hunter

4 Altria: 2015 Corporate Responsibility Progress Report | Our Progress on Responsibility Altria’s Responsibility Priorities and Goals

Reducing the Harm of Tobacco Products

Develop tobacco products that may Support programs that help reduce Provide access to expert quitting offer lower risk for adult tobacco con- underage tobacco use information for those who have sumers and engage the FDA decided to quit constructively about them

Marketing Responsibly

Build relationships between brands and their adult consumer audiences while taking steps designed to limit reach to unintended audiences

Managing Our Supply Chain Responsibly

Work with diverse, high-quality suppliers to innovate and address societal issues within the supply chain

Developing Our Employees and Culture

Develop high-performing and engaged employees who help us continue to deliver superior results in the future

5 Altria: 2015 Corporate Responsibility Progress Report | Responsibility Goals G4-4, G4-6, G4-8, G4-9, G4-EC1 Corporate Profile Our Mission is to own and develop financially disciplined businesses that are leaders in responsibly providing adult tobacco and wine consumers with superior branded products.

Altria’s companies include some of the most enduring names in American business.

Our Family of Companies

Leading cigarette manufacturer Developer and marketer of in the U.S. and has been for innovative tobacco products for the past 40 years. adult tobacco consumers.

World’s leading producer of moist A leading producer and importer smokeless tobacco. of premium wines.

Leading producer of one of the best-selling large machine-made cigars sold in the U.S.

Our Financial Performance

Net Revenues ($ in millions) Annualized Dividend per Share

$24,466 $24,522 $25,434 $1.92 $2.08 $2.26 2013 2014 2015 August ‘13 August ‘14 August ‘15

Source: Altria 2015 Form 10-K

6 Altria: 2015 Corporate Responsibility Progress Report | Corporate Profile G4-4, G4-6, G4-8, G4-9, G4-10, G4-EC1

Marlboro Long-Term Retail Share Growth Total Shareholder Return

44.0% 28.6% 2013

34.5% 2014

Marlboro is larger than the next 10 largest cigarette brands combined. 23.1% 2015

1955 1965 1975 1985 1995 2005 2015 Assumes quarterly re-investment of dividends as of ex-dividend date. Source: Bloomberg Daily Return

Other Direct Economic Value in 2015 $50.8 $275 $2,835 $6,580 $4,179 $572 $4,477 Million Million Million Million Million Million Million In cash In charges for In income taxes In excise taxes on In dividends Paid against In charges to contrbutions to FDA user fees products sold paid on common pension and state communities stock to post-retirement settlements shareholders benefits and tobacco Source: Altria Group, Inc. 2015 Annual Report agreements

Altria’s companies have a strong American heritage stretching back more than 180 years. Our companies include some of the most enduring names in American business: Philip Morris USA, the maker of Marlboro cigarettes, and U.S. Smoke- less Tobacco Company, the maker of Copenhagen and Skoal moist smokeless tobacco. We also own John Middleton, manufacturer of Black & Mild cigars; Ste. Michelle Wine Estates, maker of premium wines including Chateau Ste. Michelle, Columbia Crest and 14 Hands; and Nu Mark, an innovation company that makes e-vapor products like MarkTen®.

Who We Support

8,000+ Employees Hundreds of thousands U.S. farmers Adult consumers Over 97 percent residing in of retailers Who work in the fields Who choose our products the U.S. In all 50 states

Communities where we live and work. In 2015: $54.7 M 47,000+ 60+ Donated Hours of Community Service Executives in cash and in-kind contributed by employees served on over 100 non-profit boards contributions nationally through volunteer activities

7 Altria: 2015 Corporate Responsibility Progress Report | Corporate Profile G4-6

Where We Operate Altria and its companies operate and sell their products principally in the United States. Substantially all of Altria Group’s net revenues are from sales generated in the United States.

Franklin Park, IL

Woodinville, WA

King of Prussia, PA Limerick, PA

Headquarters Client Services Map Key Center for Research & Technology Wine Growing States Key Tobacco Growing States Richmond, VA Manufacturing Facilities Hopkinsville, KY Nashville, TN O ices

Recognition Altria ranked 91st on Barron’s 2015 World’s Most Respected Companies list, as determined by institutional investors. In 2015, Altria also received the following recognitions:

8 Altria: 2015 Corporate Responsibility Progress Report | Corporate Profile G4-12

Our Value Chain

Our Growers and Suppliers Our Companies American-grown tobacco is the backbone of PM USA’s and Our operating companies provide well-paying manufacturing USSTC’s products. PM USA and John Middleton buy internation- jobs for employees in eight states. We work to maintain strong al tobacco leaf through third-party suppliers who purchase from relationships with unions that represent about one-fourth of our farmers across the globe. workforce.

Ste. Michelle Wine Estates owns 3,856 acres of vineyards and Our tobacco companies use a safety management system contracts for grapes from long-term grape-growers on approxi- to promote an injury-free career culture and have solid safety mately 26,250 acres. records.

In addition to tobacco growers, our companies work with over 5,000 suppliers worldwide.

Our Customers Our Adult Consumers Our tobacco companies’ products are distributed to over Our companies make tobacco products and wine. When you 240,000 retail stores through a network of wholesalers. make products for adults, society expects you to market responsibly. We understand and agree. That’s why our companies work Ste. Michelle principally distributes its products in the U.S. Its hard to build relationships between their brands and adult con- wines are sold and served by more than 130,000 retailers and sumers while taking steps designed to limit reach to unintended restaurants nationwide. Outside the U.S., Ste. Michelle shipped audiences. wine through over 300 distributors globally in 2015.

9 Altria: 2015 Corporate Responsibility Progress Report | Value Chain G4-27, G4-DMA Economic Performance, G4-34, G4-56, G4-DMA Anti-Corruption, G4-DMA Anti-Competitive Behavior, G4- DMA Compliance, G4-DMA Grievance Mechanisms for Impacts on Society, G4-SO4, G4- SO11, G4-15, G4-25 Our Approach

Integrity, Trust & Respect ALTRIA’S Passion to Succeed VALUES Executing with Quality Driving Creativity into Everything We Do Sharing with Others

We approach responsibility by understanding our stakeholders’ perspectives, aligning business practices where appropriate, and measuring and communicating our progress. We support this approach by defining leadership accountabilities and setting expectations for our employees.

Governance and Oversight Consistent with our Values, we pursue The 10 Principles of the United Nations our business objectives with integrity Global Compact and the International Structure and Accountability. Altria’s and full compliance with all laws. Altria’s Labour Organization Declaration on Chairman, CEO and President and senior Chairman, CEO and President, the Fundamental Principles and Rights at management oversee our responsibility Board of Directors and senior officers Work inform our principles and policies efforts. Altria’s Board of Directors’ Nomi- are accountable for Altria’s Compliance for employees and our expectations of nating, Corporate Governance & Social & Integrity Program. Altria’s Standards suppliers. To uphold and promote these Responsibility Committee oversees our for Compliance & Integrity guide our principles, we: public affairs, corporate reputation, gover- operating companies and corporate nance and social responsibility strategies. functions in carrying out their compli- • respect the rights of our employees ance and integrity responsibilities, and and establish a culture of respect Operating company and functional we regularly evaluate performance and compliance as articulated by business leaders develop initiatives and against these standards. our Values and Code of Conduct; measure progress against our Mission, including the goals aligned with our Our Code of Conduct provides specific • work with suppliers to promote responsibility priorities. Our Corporate guidance for employee behavior. All actions that are consistent with Responsibility group advises business employees receive training on the Code our Values and Supplier Code of leaders, monitors best practices and and how to use it in decision making. We Conduct; and reports progress. Altria Client Services’ expect them to comply with the Code and Senior Vice President, Communications company policies relevant to their jobs. • collaborate with others to address & Corporate Citizenship, leads this group human rights issues where our com- and serves on our Executive Leadership We work hard to achieve a culture of panies have a role to play. Team. compliance and integrity that:

Expectations of Employees. We expect • prevents misconduct; Understanding Stakeholders’ our employees to set and pursue busi- Perspectives • identifies and addresses misconduct ness objectives that support our Mission, promptly and effectively when it demonstrate our Values and follow does occur; and Stakeholder engagement is the founda- compliance requirements, guided by tion for our responsibility efforts. Com- • makes it easier for employees to our Code of Conduct. always do the right thing. municating openly and honestly with stakeholders helps us understand the Our Values set the tone. We describe issues that present risks and opportuni- what each Value looks like when put into Respect for Human Rights. Respect ties for our businesses. action and incorporate them into our for people is fundamental to the way we performance assessment process. conduct our business.

10 Altria: 2015 Corporate Responsibility Progress Report | Our Approach 11 process involved several steps,including: expectations ofourcompanies.The ment to identify thetop responsibility 2014, we completed amateriality assess Most. WhatMatters Identifying Appendix B. engage withkey stakeholder groups in provide examples ofwhy andhow we Weinto ourmateriality assessment. incorporated stakeholder perspectives and those intheircommunities.We sumers, investors, suppliers, regulators stakeholders, includingemployees, con So ourbusinessesengagewithvarious IMPORTANT • • • developed 46 expectation themes evaluated theoutputofexercise, Company researchers qualitatively in theexercise. non-governmental organizations, organizations, and publichealth andyouthcommunity serving trade partners, government officials, ees, consumers, growers, suppliers, of stakeholders, includingemploy Team members covered arange to complete theexe or convened smallgroups internally reflected and/ engagements onpast The team interviewed stakeholders, stakeholders hadofourbusiness. top responsibility expectationsthat A cross-functional team documented Altria: 2015Corporate Responsibility Progress Report | Stakeholder/Societal Perspective Consumer Exp. Disclosure Political Quitting Assistance Exceed Sustainable ag Sustainable Community Environment Products Quality rcise. Altria’s Assessment Materiality

1 Understand AdultUnderstand Consumers Compliance In

Business PerspectiveBusiness Communicate HealthE ects Govern/

- -

Underage Prevention Regulations Transparency importance and impact to andimpact thebusiness: importance ties —those rated highonstakeholder tified ourtop four responsibility priori assessment results. From this,we iden The figure above reflects ourmateriality • • • • • culture Developing ouremployees and responsibly Managing oursupplychain Marketing responsibly support derage useandproviding cessation effects, health preventingcating un less harmful products, communi products Reducing theharm oftobacco ness impact. stakeholder andbusi importance from thesteps above, basedon a subsetofexpectations, informed The cross-functional team prioritized responsibly. a tobacco company shouldoperate rate aseriesofexpectations for how asked over 4,000 respondents to vey to solicitadditionalfeedback. We we conducted ageneral publicsur monality. onrefined Based themes, and refined thembasedoncom Financial Performance Employees Supply Chain Our Approach

. Thisincludesdeveloping Responsibly Market

2 Less Harmful Products

- - - - G4-18, G4-19, G4-20, G4-21, G4-25, G4-27, G4-DMAEconomic Performance - - - the internal view. givenexpectation; depictedashigherpriority perspective through lensofresponsibility although initiallyranked lower from business viewed internally asa“given” highpriority, harm reduction. expectation thatcessationiscovered within ing attributed withthatunderstanding; i.e., ofharmpart reduction, lower businessrank 1 inclusive ofallrelevant company issues. based onresponsibility perspective; not Team prioritization exercise. Prioritization exercise andinternal Responsibility Planning general publicresearch, stakeholder feedback qualitative exercise informed by quantitative Placementonthegridwas a important. Notes: accordance withGRIstandards. andboundariesin ofaspects tification of ourmaterial topics, includingiden Appendix Cpresents additionalanalysis progress theseexpectations. against This report describesourapproach and Committee Board. ofits rate Governance &SocialResponsibility and, in2015, withtheNominating,Corpo assessment withAltria’s seniorleaders We shared theresults ofthemateriality stakeholders expectusto operate: broader themesreflecting how our Our assessmentalsorevealed three Supporting cessationviewedSupporting internally as • • • mutual objectives. and working withothers to achieve Partnership: ness practices andprogress. aboutourbusi openly andcandidly Transparency: contributing to solutions. ership onchallenging issuesand Leadership: All issuesrepresented are considered 2 Financial performance Demonstrating lead Sharing ourexpertise Sharing Communicating Communicating

- - - - - Aligning Business Practices Measuring and Communicating Progress Our businesses work against long-term goals aligned to our Mission and materi- Stakeholders expect us to demonstrate ality assessment. They regularly evaluate a clear sense of what we’re focused on their strategies within these goals based and how we’re doing. We engage with on a variety factors, including input from them in many ways, for example, in one- stakeholders. to-one discussions, meetings, webcasts, at conferences, and through company Understanding stakeholder perspec- communications, including this report. tives informs our companies’ business practices, enhances their planning and This report shares our approach and sharpens decision making. Our compa- progress against our four responsibility nies apply what they’ve learned to: priorities: Reducing the Harm of Tobacco Products, Marketing Responsi- • identify and address emerging bly, Managing Our Supply Chain Respon- issues; sibly and Developing Our Employees and Culture. For each responsibility • inform business processes, including priority, we describe our goals, approach, annual strategic planning and risk progress and metrics. In addition, we management; report targets for certain metrics.

• align with society; On altria.com, we share progress on other responsibility topics, including how • prioritize issues for business action we are working to minimize our envi- and reporting; and ronmental impact, combat illicit trade of our products, invest in our commu- • build stakeholder understanding of nities, and operate with compliance and Altria and its companies. integrity.

12 Altria: 2015 Corporate Responsibility Progress Report | Our Approach 13 Altria: 2015 Corporate Responsibility Progress Report | Our Approach G4-PR1, G4-PR2, G4-DMA Customer Health and Safety Reducing the Harm of Tobacco Products

Develop tobacco products that may offer lower risk for adult tobacco consumers and engage the FDA constructively about them GOALS Support programs that help reduce underage tobacco use Provide access to expert quitting information for those who have decided to quit

The goal of tobacco harm reduction is to reduce the health effects of tobacco use. It starts with existing tobacco prevention and cessation strategies. A comprehensive harm reduction strategy also includes offering consumers less harmful products and information about them, all within a science- and evidence-based regulatory framework. This concept recognizes that millions of adults will likely continue using tobacco products despite efforts encouraging them to quit or never start. For those adults, federally-regulated lower-risk products offer a promising opportunity to reduce the harm associated with tobacco product use, particularly cigarette smoking.

Continuum of Risk

Combusted Tobacco Non-combusted Products Tobacco Products There’s an opportunity MOST HARMFUL LEAST HARMFUL for FDA to come up with See, e.g., Mitchell Zeller et al., The Strategic Dialogue on Tobacco Harm Reduction: A Vision and Blueprint for Action in the US, 18 Tobacco Control J. 324, 325 (2009); Dorothy K. Hatsukami et al., Developing the Science Base for Reducing Tobacco Harm, 9 what I’ve been calling a Nicotine & Tobacco Res. S537, S546 (2007) comprehensive nicotine Many leading public health authorities agree there is a substantial continuum • developing and marketing lower-risk products; regulatory policy that is of risk among tobacco products, with • helping reduce underage tobacco use; agency-wide and that is conventional cigarettes at the highest end of that spectrum. Products that • supporting cessation; and keyed to something that are lower on this continuum can, with • communicating about the health we call the continuum the right regulatory oversight, offer effects of tobacco use. consumers options for reducing their of risk: that there are health risks. Today, the Food and Drug Our companies are developing a port- different nicotine Administration (FDA) is well positioned folio of products and technologies to to study the science and determine how both meet the evolving expectations of containing and nicotine best to ensure consumers have access adult tobacco consumers and poten- delivering products that to lower-risk products and information tially reduce the risk of tobacco-related about them. disease. Our work also includes con- pose different levels ducting robust scientific research to of risk to the individual. We have an important role to play in support modified-risk tobacco product helping advance this tobacco harm applications within the FDA’s regulatory reduction approach. Reducing the harm framework. – Mitch Zeller, Director of FDA’s caused by tobacco products has been Center for Tobacco Products; a strategic focus of our companies for Developing Lower-Risk November 6, 2013. a long time and is an important step in Products achieving our Mission. We support several approaches to reducing the harm We recognize the harm caused by caused by tobacco products and our tobacco products and the challenges companies focus on four areas: that come with manufacturing and mar-

14 Altria: 2015 Corporate Responsibility Progress Report | Reducing the Harm of Tobacco Products G4-PR2

keting products that are addictive and cause serious disease. Case Study: Heated Tobacco — An Idea Before Its Time Providing adult tobacco consumers with lower-risk products is not a new Philip Morris USA’s work with a product called Accord is a good exam- goal. Over the last 20 years, our compa- ple of how long our companies have focused on reducing the harm of nies have invested billions of dollars in tobacco products. this effort. It’s challenging work, but we’re making progress. We’ve also learned In the 1990s, PM USA test-marketed Accord as an alternative to tradition- quite a lot along the way, including: al cigarettes. Accord used an electronic device to heat tobacco instead of burning it. PM USA’s marketing materials emphasized that Accord • Adult tobacco consumers must be produced less smoke and odor. When it was rolled out to consumers, it willing to try a new product. If not, didn’t succeed for a few reasons. there’s little chance that the product will be successful. First, most consumers at that time weren’t as interested in trying new kinds of tobacco products. They didn’t care for the taste, so they stayed • Adult tobacco consumers want a with existing products that met their preferences. product that is proven to be less harmful and that appeals to them. If Second, science in this area was still developing and consumers had no adult tobacco consumers don’t like reason to think this product might be less harmful than cigarettes. At the product, they won’t use it. that time, the FDA didn’t yet regulate tobacco products, and there was no prescribed regulatory framework to assess the product. • Adult tobacco consumers should receive clear and accurate communi- The world has changed quite a bit since then. Adult tobacco consumers cations about less harmful products are more open to trying different kinds of products. The FDA has created that are grounded in science. pathways for companies to submit lower-risk products for agency review. And perhaps most importantly, technology has advanced. As adult tobacco consumer preferences have changed, so have our products. PM USA and Philip Morris International (PMI) were both subsidiaries of Our tobacco companies now offer a Altria until March 2008 when PMI was spun off. Since then, PMI has de- range of products beyond cigarettes. veloped the next generation of heated tobacco products. Today, we have And, in 2012, we established a company, an exclusive license in the U.S. for two of PMI’s heated tobacco products, Nu Mark, to develop e-vapor and other including its electronically heated tobacco system. This product’s roots innovative tobacco products. began with Accord, and it now embodies substantial technological changes. PMI is marketing its electronically heated tobacco product in Today, our companies are actively en- Europe and Japan under the iQOS brand with promising initial results. gaged in developing and advancing the PMI is in the process of developing a modified risk tobacco product ap- science needed to support potentially plication to be submitted to the FDA for its electronically heated tobacco reduced harm products. Our scientists product in the U.S. published their work on harm reduction and innovative products in seven peer-reviewed publications and two book chapters. They also shared their work at leading international scientific conferences such as the Society for Research on Nicotine and Tobacco and various FDA workshops.

As adult tobacco consumer preferences continue to evolve, we’ll continue to em- brace the opportunities and challenges of bringing lower-risk tobacco products to market.

15 Altria: 2015 Corporate Responsibility Progress Report | Reducing the Harm of Tobacco Products Annual Synar Report Helping Reduce Underage Through Success360°, we also support National Weighted Average proven effective adolescent substance 50% Tobacco Use Retailer Violation Rate abuse prevention and tobacco cessation Underage Sales of Tobacco: National Weighted Kids should not smoke or use any programs, including LifeSkills® Training, Average Retailer Violation Rate tobacco products including e-vapor and 4-H’s Health Rocks! program and RJ 40% 40.1 tobacco-derived nicotine products. Caron’s Project CONNECT.

Positive youth development theory These programs are making a differ- 30% teaches that emphasizing protective ence. For example, 94 percent of Health factors in kids’ lives — such as positive Rocks! survey respondents express 25.4 relationships and activities — and reduc- disapproval of underage tobacco use, ing risk factors help kids make healthy and 94 percent of Boys & Girls Club 20% 20.0 20.5 16.3 decisions and resist a broad range of survey respondents report intention not risky behaviors, including tobacco use. to smoke. 17.5 12.8 10.8 10.9 14.1 9.9 9.6 10% 11.6 8.5 Grounded in this theory and guided by In addition, because parents and 10.5 9.3 9.1 Altria’s Standards for Underage Tobac- other positive adult role models play an co Prevention, our tobacco companies important role in healthy youth develop-

0% invest in programs to help reduce under- ment, we support the National Men- age tobacco use. These efforts include: toring Partnership’s Quality Mentoring 2011 1997 2013 2012 1998 1999 2001 2010 2003 2007 2002 2005 2004 2008 2009 2006 2000 System, which established consistent • supporting programs and organiza- standards for youth mentoring. We tions that positively influence kids also support Search Institute’s Parent Source: FFY 2013 Annual Synar Report and their decision not to engage in Further® online resources, which help risky behaviors like tobacco use; parents and other caring adults build skills to help their children succeed and • supporting trade programs, retailer avoid risky behaviors. Past Month Tobacco Use training and legislative efforts that National Survey on Drug Use help prevent underage access to In 2015, Success360° investments and Health — NSDUH tobacco products; and totaled over $22.7 million, represent- Among Youth Aged 12 to 17 ing 50 percent of our total budgeted

Tobacco Products Cigarettes • taking steps designed to limit reach corporate contributions. Collectively, our Cigars Smokeless Tobacco of their brands and marketing Success360° partners reached over 15 20% materials to unintended audiences. million kids nationwide.

Underage Access 15.2 Prevention at Retail 15%

13.0 With a focus on middle school students, Our companies’ retail programs include our Success360° initiative aims to pro- several requirements and financial incen- mote the healthy development of kids tives that help prevent underage access 10% to help them avoid risky behaviors like to tobacco products. The program’s tobacco use. requirements include teaching store 7.0 clerks how to check IDs and requiring Through this initiative, Altria’s tobacco retailers to place We Card® signs in their 5% 4.5 companies invest in leading youth-serv- stores. To complement this, our tobacco 4.9 ing organizations such as 4-H, Big companies fund We Card®, an organi- 2.1 Brothers Big Sisters, Boys & Girls Clubs, zation that provides retailer training and 2.0 2.0 Communities in Schools and The First resources to help prevent underage

0% Tee. Success360° helps these organiza- access. We also offer retailers and their tions collaborate and better connect the employees’ access to free We Card® 2011 2013 2012 2014 2010 2003 2007 2002 2005 2004 2008 2009 2006 services they provide to kids and their training through our retail trade website.

Source: Center for Behavioral Health Statistics and Quality (2015). families in and out of the classroom. Behavioral health trends in the United States: Results from the 2014 National Survey on Drug Use and Health (HHS Publication No. SMA 15-4927, NSDUH Series H-50). Retrieved from http://www.samhsa.gov/ data/

16 Altria: 2015 Corporate Responsibility Progress Report | Reducing the Harm of Tobacco Products

We’ve supported We Card® since it start- ed in 1995. With our support, We Card® Case Study: Nu Mark — Addressing has trained hundreds of thousands of Underage E-vapor Use retail employees and distributed millions of education and training materials. While underage smoking rates have consistently declined for nearly 20 years, a new challenge has emerged. Underage use of e-vapor products Our tobacco companies continue to is on the rise. According to the Centers for Disease Control and Pre- support legislation designed to keep vention, cigarette smoking among high school students declined from tobacco products out of the hands of 12.7 percent in 2013 to 9.2 percent in 2014. E-cigarette use among these kids. For example, Nu Mark, our compa- individuals, however, increased from 4.5 percent to 13.4 percent during ny that develops and markets innovative this time. tobacco products for adult tobacco consumers, has proactively advocated Nu Mark focuses on helping prevent underage e-vapor use, starting at for legislation establishing a minimum the source of access. Just a few years ago, underage youth could legally legal age to purchase e-vapor products. buy e-vapor products in more than half the states. Clearly, this was a Today, 48 states have those laws on the problem. So we have advocated for legislation establishing a minimum books. legal age to purchase e-vapor products. Fifteen states passed such laws in 2014 and six enacted them in 2015, bringing the total to 48 states. We’ll continue to pursue legislation in the remaining states. Nu Mark also sup- Supporting Cessation ports scientific and evidence based regulation of the e-vapor category by the FDA. Part of this regulation would include establishing a national For adult consumers concerned about minimum legal age to purchase e-vapor products. the health effects of smoking or smokeless tobacco use, the best thing to do Access prevention measures are most effective when complemented is quit. For many, quitting can be very with other prevention efforts. In 2015, Nu Mark joined Altria’s other difficult. For those who decide to quit tobacco companies’ to support their Success360° initiative that invests we’ve developed QuitAssist®, a website in programs designed to bolster protective factors and minimize risk to help them be more successful. factors in kids’ lives. At the same time, we sought to better understand underage e-vapor use. We reviewed government surveys and published We developed QuitAssist® with a review research. We learned that the risk factors associated with e-vapor use board of experts in the area of smoking are largely consistent with those for smoking and other tobacco use. For cessation. It highlights the Centers for example, use of other tobacco products, alcohol and drugs; low academ- Disease Control and Prevention’s “Five ic performance; and peer smoking have been associated with e-vapor Keys for Quitting” and helps connect use. Parental support has been identified as a protective factor. These adult tobacco users who have decided findings are consistent with Nu Mark’s investment in Success360°. to quit to expert quitting information from public health authorities and Looking ahead, we’ll apply our learning and evolve our portfolio as need- others. In 2015, we refreshed the ed to respond to the changing underage tobacco prevention landscape. QuitAssist® website to modernize the site design and update the resources.

We communicate about QuitAssist® through our corporate and product websites, email and direct mail. Since its launch in 2004, the website has received nearly 3.3 million visits.

17 Altria: 2015 Corporate Responsibility Progress Report | Reducing the Harm of Tobacco Products Communicating About the Congressionally-mandated health For more information about product Health Effects of Tobacco Use warnings have been on cigarette packs ingredients and how our tobacco com- since 1966 and cigarette brand advertis- panies communicate about the health The public should be guided by the ing since 1972. Similar warning require- effects of their products, visitPhilip messages of the U.S. Surgeon General, ments have been in place since 1986 for Morris USA, U.S. Smokeless Tobacco the FDA and other public health au- smokeless tobacco products and since Co., John Middleton and Nu Mark’s thorities worldwide in making decisions 2000 for the cigars John Middleton sells. corporate websites. concerning the use of tobacco products. Additionally, our tobacco companies provide certain reports, such as ingredient Our tobacco companies’ efforts to disclosures and information about harm- communicate about health risks begin ful or potentially harmful constituents in with ongoing compliance with federal tobacco products to various federal and laws and regulations requiring health state agencies, including the FDA. warnings on tobacco products.

Our Performance Develop tobacco products that may offer lower risk for adult tobacco consumers and engage with the FDA constructively about them.

2X 21

Nu Mark introduced MarkTen® XL, Several company executives met In 2015, we conducted 21 engage- which has twice the liquid and battery with officials from the Office of ments on the topics of tobacco harm life as the original. Management and Budget to discuss reduction and regulatory compliance. the FDA’s regulation of cigars, e-vapor and other tobacco products.

Continue to support programs that help reduce underage tobacco use $22.7M+ 15M+ 25,321 4,974 Amount invested in Number of kids Number of retailers Altria-funded retailer Success360° programs Success360° partners trained through We Card® trainings through (50 percent of total budgeted reach nationwide in 2015 We Card® in 2015 corporate contributions)

Provide access to expert quitting information for those who have decided to quit

44,029 Established target to increase annual Number of visits to the 20% visits to the QuitAssist® website by QuitAssist® website in 2015 20 percent off the 2015 baseline by 2018

18 Altria: 2015 Corporate Responsibility Progress Report | Reducing the Harm of Tobacco Products 19 Altria: 2015 Corporate Responsibility Progress Report | Reducing the Harm of Tobacco Products G4-DMA Indirect Economic Impacts, G4-DMA Product and Service Labeling, G4-DMA Marketing Communications Marketing Responsibly

Build relationships between brands and their adult GOAL consumer audiences while taking steps designed to limit reach to unintended audiences

Our companies make tobacco products and wine for adults. Society expects us to market them responsibly. We understand and agree. That’s why our goal is to build re- Examples of our tobacco lationships between our brands and their adult consumers while taking steps designed companies’ marketing to limit reach to unintended audiences. practices include:

We make progress against our goal by are using these insights to develop prod- understanding consumer interest and ucts and brand experiences that exceed Connecting with adult connecting those consumers with our their expectations. tobacco consumers through brands. We have controls in place to direct mail and websites make certain that our marketing activ- We closely monitor consumer feedback ities are designed to limit our reach to about our brands. Since 2010, we’ve unintended audiences. commissioned an annual independent brand equity review that measures Supporting product launches Our companies’ marketing approach equity across numerous dimensions in adult-only facilities begins with adherence to our Mission and as an overall composite. We have and compliance with all legal, regula- learned that Marlboro’s overall equity tory and internal policy requirements. scores among adult smokers have We work hard to instill a culture of strengthened since 2010, rising about Working with retailers to responsibility throughout our marketing one point per year off an already high merchandise tobacco products and sales organizations and with our base. Marlboro’s overall equity score responsibly and supporting business partners. Marketing programs now stands more than 14 points higher the We Card® program vary among our tobacco companies than the leading competitive brands. and their brands. But the focus remains the same — to responsibly grow market We complement our consumer insight share by enhancing brand awareness, process with a robust trend system that Denying requests to use their rewarding loyalty and driving compet- looks across macro-factors affecting the brands in movies, television, itive conversion among adult tobacco marketplace. Collectively through these video games and other consumers. programs, we gain a deep understand- entertainment media ing of our consumers.

Understanding Our Consumer Connecting With Our Consumer Advertising only in We have a rigorous approach to un- publications that meet the derstanding adult consumers. We use Marketing activities are intended to con- Food and Drug Administration’s market and consumer research to deep- nect brands with their adult tobacco and (FDA) criteria ly understand our consumers and their wine consumer audiences by reinforcing preferences. For example, we’ve learned the brand identity, positioning and value. that adult tobacco consumers’ prefer- Dedicated brand teams develop annual ences are changing, and our companies plans that use a variety of activities, tools

20 Altria: 2015 Corporate Responsibility Progress Report | Marketing Responsibly G4-EC8, G4-DMA Indirect Economic Impacts, G4-DMA Product and Service Labeling, G4-DMA Marketing Communications and channels, including a substantial If our tobacco companies use print Group Distribution Company (AGDC) age-verified adult tobacco consumer da- advertising, they limit these ads to news- provides the sales and distribution tabase, to engage with adult consumers. papers, magazines and other publica- services for our tobacco companies. tions that meet the criteria of an “adult Wholesalers and retailers, also known as We connect with adult consumers publication” under the FDA’s proposed “our trade partners,” play critical roles in in ways designed to limit reach to definition. Under this standard, an adult our product distribution network. unintended audiences. For example, publication is one: our companies use brand websites to AGDC works with our trade partners to communicate with adult tobacco and • whose readers younger than 18 years execute our trade programs, which help wine consumers. To gain access, we old make up 15 percent or less of the them responsibly manage their tobacco require visitors to confirm that they are total readership as measured by com- category. In 2015, AGDC covered approx- adults and meet the website’s minimum petent and reliable survey evidence; imately 240,000 retail stores, represent- age requirement. Some of our compa- and ing over 95 percent of tobacco industry nies’ websites sell e-vapor products and volume. accessories or wine. In these instances, • that is read by fewer than 2 million our companies use an age-verification persons younger than 18 as mea- Our retail trade program is built on effec- process to confirm the consumer is of sured by competent and reliable tive category management principles, legal age to purchase the products. Our survey evidence. including: companies also comply with all laws in- volving the sale and delivery of e-vapor Ste. Michelle Wine Estates works with • merchandising our products in an products and wine. leading industry groups committed to organized way; the responsible promotion and sale of The external vendor that manages wine to adults, including the Washington • having our brands in-stock and our electronic age-verification process State Wine Commission, Washington available; conducts quarterly audits. In 2015, each Wine Institute, Wine Institute and Wine of these quarterly audits reflected 100 America. Among other actions, Ste. Mi- • having our most popular brands in percent effectiveness rate in screening chelle complies with the Wine Institute’s preferred positions; out persons under the age of 21. “Wine Industry Code for Direct Shipping,” which addresses direct shipments of • clearly communicating price and Our online connection with our adult wine to adult consumers and compli- promotional offers; and consumers has been effective:Marlboro , ance with federal and state laws. Ste. Copenhagen and Skoal websites all Michelle also educates its employees • deterring access by underage ranked in the top ten among 100 bench- about age verification when serving purchasers. marked websites in a 2014 third-party adult consumers. review for user satisfaction. In 2015, PM The program also includes features not USA expanded their age-verified Connecting With the Trade required by federal law that help prevent one-to-one digital communications underage access to tobacco products. to include mobile apps and mobile Our tobacco companies sell their These include training for store clerks couponing. products to wholesalers, who in turn, sell on how to check IDs and requirements to retailers and other wholesalers. Altria for retailers to place We Card® signs.

Convenience Stores and the Tobacco Category in 2015

Convenience stores drive about 70 percent of the tobacco adult tobacco consumer also purchases other items inside the volume sold, making this an important category of retailers convenience store — that’s almost 20 points higher than the to us. Roughly 150,000 convenience stores across the U.S. average for convenience store consumers of other product generate approximately $700 billion in annual revenues, categories. Those other items round out the market basket. including gasoline. Each and every day, 160 million consumer The average adult tobacco consumer spends just over $25 per transactions take place in a convenience store. Almost half of all trip, compared to roughly $6 for non-tobacco convenience convenience store shoppers are 21-39. The tobacco categories store purchases. So, many convenience store retailers rely on lead in revenue with 36 percent of inside convenience store tobacco to increase foot traffic and boost in-store sales. We use sales and deliver the third highest gross profit dollars at 17 these insights in achieving retailer alignment and support for percent. Importantly, about 50 percent of the time, the average our offerings.

21 Altria: 2015 Corporate Responsibility Progress Report | Marketing Responsibly G4-PR5, G4-DMA Product and Service Labeling, G4-DMA Marketing Communications

In addition, we’ve developed rigorous compliance and training systems to govern marketing material production. In some tobacco categories, we also offer financial incentives to retailers who refrain from placing any tobacco products on top of or below the front of the selling counter.

In 2015, AGDC conducted its 4th annual customer satisfaction survey with retail trade partners to identify areas where it could improve. Eighty percent of national and regional multi-store operators were “very or somewhat satisfied” with the overall performance of AGDC’s sales representatives. Almost seven out of 10 individual store owners and managers were “very satisfied.”

Compliance

Policies guide how our tobacco companies market their products to adult tobacco consumers. We develop, review and approve consumer advertising materials through a step-by-step compliance review process. This process includes controls to identify business or legal issues before the materials are produced.

To support this effort, employees must:

• create marketing materials and programs that comply with all legal requirements, our Code, policies, practices and commitments;

• hold advertising agencies and marketing consultants to these standards;

• never make misrepresentations about our companies’ products, including the health effects of those products;

• substantiate all claims about our companies’ products before making claims; and

• never market our companies’ products to underage persons.

22 Altria: 2015 Corporate Responsibility Progress Report | Marketing Responsibly G4-PR2, G4-PR7, G4-PR4, G4-DMA Marketing Communications

Our Performance Understanding consumer interest and marketplace dynamics

Marlboro’s overall equity scores among adult smokers have strengthened since 2010, rising about one point per year off an already high base

Connecting adult consumers with our brands

51.3% 27.7% 54.9%

Retail market share achieved by Retail market share achieved by Retail market share achieved PM USA’s cigarette brands John Middleton’s cigar brands, pri- by U.S. Smokeless Tobacco marily Black & Mild Company’s brands Marlboro alone achieved a market share of 44 percent, larger than the next Copenhagen and Skoal achieved a 10 cigarette brands combined combined share of 51.3 percent

Nu Mark continued its expansion of MarkTen XL e-vapor products to additional select retail chains and expanded Green Smoke’s retail distribution into specific chains in several lead markets

90+ Wine & Spirits magazine honored Ste. Michelle Wine Estates Ste. Michelle 20 times as a “Winery received 260 ratings of 90 or of the Year,” more than any better for its wines, a 40 percent other American winery increase over 2014

Limiting our reach to unintended audiences

Brand employees and key business partners trained on Master Settlement Agreement marketing guidelines and policies enforcement actions in 2015 for Philip 100% against a target of 100 percent in 2015 0 Morris USA, against a target of 0

23 Altria: 2015 Corporate Responsibility Progress Report | Marketing Responsibly Managing Our Supply Chain Responsibly

GOAL Work with diverse, high quality suppliers to innovate and address societal issues within the supply chain

Our companies work hard to develop strong supply chains. Our companies partner with thousands of suppliers from farmers to manufacturers — some of these relation- 2015 Tier 1 and Tier 2 ships dating back decades. Diversity Spends:

We work closely with our suppliers to set Developing Long-lasting clear expectations, monitor compliance Relationships and address concerns where we have ~$174.1 M a voice. As our supply chain continues We build strong business relationships 2015 Tier 1 Diversity Spend to evolve, we remain attentive to new through open dialogue, shared expec- (direct spend) expectations and areas where we can tations and feedback. We communicate affect change. directly with our supplier base and conduct periodic reviews. We aim to To maintain a secure and reliable source develop lasting relationships with suppli- of materials and services, we partner with ers who deliver high-quality goods and ~$55.4 M suppliers that share our commitment to: services, manage business risk, reduce 2015 Tier 2 Diversity Spend costs and find innovative solutions. (suppliers’ direct spend) • respect workers’ rights; Those relationships demand strategic planning, clear performance objectives, • reduce the environmental impact of subsequent assessment, including their activities; and third-party audits, and a comprehensive risk management system. We also • comply with our contracts and the engage suppliers in each stage of our law. quality management process to help us consistently produce high-quality The 10 Principles of the United Nations products. Global Compact, the International Labour Organization Declaration on Fundamen- tal Principles and Rights at Work, and Developing a Diverse national laws inform our expectations of Supplier Base suppliers.

G4-DMA Indirect Economic Impacts, G4- Our suppliers’ diversity contributes to DMA Procurement Practices, G4-DMA Sup- Our supply chain management approach our companies’ success by helping to plier Environmental Assessment, G4-DMA includes building long-lasting relation- generate different ideas, perspectives Supplier Assessment for Labor Practices, G4-DMA Labor Practices Grievance Mech- ships, developing a diverse supplier base, and solutions. anisms, G4-DMA Investment, G4-DMA promoting a strong culture of responsibili- Freedom of Association and Collective ty, and monitoring and assessing supplier Altria’s companies have a long history of Bargaining, G4-DMA Child Labor, G4-DMA Forced and Compulsory Labor, G4-DMA performance. working with diverse suppliers, including Supplier Human Rights Assessment, G4-DMA Human Rights Grievances Mech- anism, G4-DMA Supplier Assessment for Impacts on Society, G4-HR5, G4-HR6

24 Altria: 2015 Corporate Responsibility Progress Report | Managing Our Supply Chain Responsibly women-owned and minority-owned Monitoring and Assessing businesses. In recent years, we expand- Supplier Performance ed our focus to include veteran and Percent of Social Compliance lesbian, gay, bisexual and transgender Our monitoring programs assess com- Audit Findings by Category (of suppliers. Our Supplier Diversity Devel- pliance with our expectations and help Audits with Findings) opment program allows us to work with keep our tobacco growers and suppliers hundreds of diverse enterprises. For accountable for their actions. These pro- many years, we’ve supported organi- grams include assessments, remediation 1% 5% zations including the National Minority plans and follow-up. These activities en- Supplier Development Council and the courage continuous improvement and 7% Women’s Business Enterprise National help identify areas for greater focus. Council to increase business opportunities for their members. We prioritize our monitoring, assess- 17% ments and remediation based on sever- 53% In 2015, we worked with our key al factors including country risk, supplier suppliers on the topic of diversity and criticality, brand risk and our influence inclusion. In support of the effort, we: on supply chain compliance. 17%

• hosted in-depth engagements on Using a risk-based approach, we employ diversity and inclusion with 13 out of a third-party assessor to conduct social 50 top strategic suppliers; compliance audits internationally. These audits monitor suppliers’ adherence to • coordinated a supplier diversity specific elements of our contracts and business fair with 14 other Virginia Supplier Code of Conduct. The audits 53% Worker Health/Safety sponsors and more than 70 diverse also assess workplace practices like child suppliers to develop business rela- and forced labor, worker registration 17% Work Hours/OT/Rest tionships; and and compensation, workplace safety, management of employee records and 17% Wages/Pay • exceeded our diversity spend goal of environmental practices. nine percent. 7% Other (i.e. Record Keeping) Any factory found to have material issues is required to develop a corrective 1% Environment Promoting a Strong Culture action plan and will be re-inspected by of Responsibility third-party assessors. We continue to 5% Benefits/Social Insurance work with our suppliers to address find- We expect our employees to exercise ings related to the key social compliance sound business judgment when select- areas. As Altria’s operating companies ing suppliers. Our companies conduct become more global, we’re focused on risk assessments as part of the procure- compliance and addressing expecta- ment process. We instill a strong culture tions within our supply chains. of compliance, and we train employees on key compliance topics such as anti- trust, anti-bribery, anti-corruption and Applying Our Approach to effective supplier management. Our Tobacco Supply Chain

We communicate expectations for sup- As a tobacco industry leader, we have pliers through Altria’s Supplier Code of built sustainable tobacco supply chains. Conduct. Our Supplier Code of Conduct Over time, we have led efforts to im- addresses non-discrimination, child and prove on-farm working conditions and forced labor, freedom of association, address child labor on tobacco farms. G4-LA15, G4-HR1, G4-HR4, G4-SO11, G4-HR5, G4-HR6, G4-HR11, G4- workplace safety, bribery and environ- We work to enhance our tobacco supply SO10, G4-DMA Indirect Economic Impacts, G4-DMA Procurement mental compliance. We also address chain’s compliance with our standards, Practices, G4-DMA Supplier Environmental Assessment, G4-EN33, G4-DMA Supplier Assessment for Labor Practices, G4-DMA Labor these topics in our supplier contracts applicable laws and regulations. This Practices Grievance Mechanisms, G4-DMA Freedom of Association and support programs that advance includes protecting worker rights such and Collective Bargaining. G4-DMA Child Labor, G4-DMA Forced our supply chain performance beyond as fair hiring and payment practices, and Compulsory Labor, G4-DMA Supplier Human Rights Assess- ment; G4-DMA Human Rights Grievance Mechanisms, G4-DMA regulatory compliance requirements. respect for the legal rights of employees Supplier Assessment for Impacts on Society

25 Altria: 2015 Corporate Responsibility Progress Report | Managing Our Supply Chain Responsibly to join or not join a union, freedom from tobacco growing under conditions that Monitoring and assessing. Philip harassment and discrimination, safe help to reduce environmental impact Morris USA and U.S. Smokeless Tobacco transportation and housing, and the and improve on-farm work experience. Company implemented an on-farm GAP elimination of child and forced labor. These materials are distributed to all assessment process. The assessments We’ll continue this work with our stake- direct contracted growers, and training review growers’ compliance with key holders to prevent any exploitation of is provided to make sure our expecta- GAP practices related to agricultural, workers. tions of our suppliers are clear. Altria environmental and labor practices. The Client Services leads the training and GAP assessment also provides imme- Communicating our expectations. education task force of the Farm Labor diate and direct feedback to growers, We focus on enhancing the farm labor Practices Group, which in partnership engaging them in the process. work experience for both growers and with the U.S. Department of Labor and workers. In addition to our Supplier GAP Connections, a third-party industry Code of Conduct, our tobacco com- provider, implemented enhanced GAP panies established Good Agricultural labor management training. Practices (GAP) to encourage quality

Case Study: Helping Our Tobacco Growers Succeed

Farming is about more than tractors and soil. Sure, a major part of reminders of little changes that have taken place over the last 10 years being a tobacco grower is a focus on seeds, fertilizer and fields. But or so, like making sure all our workers file taxes for 2015.” in today’s agri-business, every farmer operates in a complex world of environmental laws, labor management challenges and a regulated According to Richard Blaylock, N.C. District Director for the U.S. Depart- tobacco industry. ment of Labor, Wage & Hour Division, a key to successful regulation of farm labor is education and partnering throughout the process. “We In recent years, our tobacco companies helped augment the U.S. To- very much believe that if you expect compliance out of any industry, bacco GAP handbook and helped create GAP Connections, a third-par- you’ve got to be able to share with them what that means and answer ty organization that develops, maintains and promotes GAP standards questions they may have. Depending on the specifics, growers may among growers and the tobacco companies who purchase their crop. be subject to three laws: the Fair Labor Standards Act, the Migrant and Seasonal Agricultural Worker Protection Act and the H-2A program. In 2015, through GAP Connections, growers received Enhanced Labor And we understand that there can be some confusion. We encourage Training on best practices in three areas: crop, environmental and growers to reach out to us with questions that they may have.” labor management. Close to 10,000 growers took the training during 100 meetings in 11 tobacco-growing states. Agricultural supply chain sustainability is vital to our businesses. That’s why Altria is committed to training growers who supply Our growers tell us that these programs provide the tools they need to tobacco for our companies’ products on legal requirements and best succeed and meet contractual and legal requirements. practices that can make their businesses stronger and protect the sustainability of our supply chain. We partner with the U.S. Department Ron Conyea, a grower from Hickory, Ky. said, “It was well worth our of Labor, and other industry stakeholders to provide industry-leading time. These regulations and the things you need to do to comply keep GAP training to our growers. getting more difficult for the average farmer to understand. With the necessity to use migrant labor, it’s just critical that we have training. “Education is a huge part of the U.S. Tobacco GAP program, and it is GAP assessments used to be geared toward what we need to do on the component that separates us from the other commodity GAP pro- the farm with our crop. Now they’re adding more of the labor end of grams,” said Jane Starnes, GAP Connections Executive Director. “We the regulations so that we’re out in front of it.” don’t just show up on the farm and do an assessment. We’re actually meeting with these growers and providing them with instructions and “It was very informative,” said Tim Shelton, a grower from Dry Fork, materials to help them be compliant. It is a really proactive approach Va. “There were a lot of [complex policy and best practice] things the industry is taking.” that need to be reiterated so we can remind ourselves of it each year and make sure we have it implemented. It was valuable to get subtle

G4-EN33, G4-DMA Indirect Economic Impacts, G4-DMA Procurement Practices, G4-DMA Supplier Environmental Assessment, G4-DMA Supplier Assessment for Labor Practices, G4-DMA Labor Practices Grievance Mechanisms, G4-HR1, G4-DMA Child Labor, G4-DMA Forced and Compulsory Labor, G4-DMA Supplier Human Rights Assessment, G4-DMA Human Rights Grievance Mechanisms, G4-HR11, G4-HR5, G4-HR6, G4-DMA Supplier Assessment for Impacts on Society, G4-SO11

26 Altria: 2015 Corporate Responsibility Progress Report | Managing Our Supply Chain Responsibly G4-DMA Indirect Economic Impacts, G4-DMA Procurement Practices, G4-DMA Supplier Environmental Assessment, G4- EN33, G4-DMA Supplier Assessment for Labor Practices, G4-DMA Labor Practices Grievance Mechanisms, G4-HR1, G4-DMA Supplier Human Rights Assessment, G4-DMA Human Rights Grievance Mechanisms, G4-HR11, G4-SO11

Annually our assessment program mon- The chart below shows domestic grower Issue Spotlight: Green itors (a) approximately one third of the performance based on results of 2015 Tobacco Sickness growers that were 100 percent compli- third-party GAP assessments. We are aware and engaged on ant the prior year, (b) new growers and issues across the agricultural (c) growers that were not 100 percent For tobacco produced by growers over- industry. Green Tobacco Sickness compliant in the prior year. In addition, seas, we work with tobacco suppliers to (GTS), however, is unique to our each year a third party randomly selects promote and maintain GAP among such industry and we are focused on 10 percent of the assessed growers for growers. This includes crop manage- long-term solutions. Our tobacco an independent audit. All contracted ment, environmental management, la- companies have worked to better growers are visited at least once every bor management, and where applicable, educate and inform growers about three years. Green Tobacco Sickness (GTS) protocols. GTS.

When working in tobacco fields, it’s possible for farmers and their workers to come in contact with wet tobacco. If workers are not properly protected, they can Domestic Third-Party Assessments become sick if the nicotine in the Percent Meeting Percent Using tobacco plant is absorbed through GAP Focus Areas Farms: All Requirements Additional Best Practices their skin. We’re working with Crop Management growers on growing and harvest- Variety Integrity ing tobacco safely, in compliance Integrated Pest Management N/A with all laws and regulations and Crop Integrity in a way that reduces the environ- Nutrient Management mental impact of tobacco produc- Environmental Stewardship tion. We’ve taken additional steps Natural Resource Management N/A to prevent GTS by: Crop Protection Agent Management Labor Management • distributing GTS informational Labor Management / Child Labor / Safety materials to tobacco growers;

85 – 100% 70 – 84.9% 55 – 69.9% <55% • endorsing the U.S. Tobacco Chart Note: The labor management section of the third-party assessments includes: labor sourcing, hours and wages, on-farm GAP handbook — which is housing (if applicable), safety training and use of personal protection equipment distributed annually to all contracted domestic growers — including specific protocols on GTS;

• communicating about GTS protocols through grower newsletters, GAP and grower meetings;

• requiring in our tobacco companies’ contracts that growers implement the Occupational Safety and Health Administra- tion’s recommended practices for the prevention of GTS and provide labor training on how to avoid GTS; and

• implementing procedures to assess their adherence to these protocols.

27 Altria: 2015 Corporate Responsibility Progress Report | Managing Our Supply Chain Responsibly Engaging with stakeholders. We engage with our suppliers and other key Case Study: Improving Our Insight Into stakeholders to monitor and address the On-farm Working Experience opportunities and concerns within our supply chains. For example, we Philip Morris USA and U.S. Smokeless Tobacco Company continually work directly with growers, regulatory review their on-farm assessment program to enhance their monitoring agencies, key agricultural stakeholders approach and to expand review areas when necessary. In 2015, PM USA and working groups like the Farm Labor and USSTC executed two pilots focused on labor practices on the farm. Practices Group to help farmers, farm They launched these pilots to learn more about on-farm labor practices, labor contractors and farmworkers bet- the treatment of tobacco workers and growers’ employment practices. ter understand and comply with labor laws and regulations. We’re also working The first pilot focused on expanding the scope of the Good Agricultural to foster improved farm labor prac- Practices (GAP) assessments. The assessments monitor growers’ compli- tices, including child and forced labor. ance with key GAP practices related to agricultural, environmental and These engagements provide us with an labor practices. For the first time, GAP Connections was asked to include additional lens to view issues of shared worker interviews during the on-farm audit. PM USA and USSTC ran- concern within our supply chains. We domly selected 83 of their contracted growers to participate in this pilot. may not always agree with some of the Third-party assessors immediately addressed any violations observed proposed remedies, but we continue to during the assessments or, if more significant findings occurred, elevat- engage with stakeholders to make sure ed them to us for corrective action. human rights are respected.

The second pilot focused on labor practices not previously reviewed by Stakeholder engagement has influenced the companies. This included worker payroll records and I-9 compliance our business practices as well. Beginning processes. PM USA and USSTC contracted with a third party to assess 40 in late 2013, Human Rights Watch (HRW) randomly selected growers for this pilot. engaged major tobacco companies and others on their research on child labor Both pilots provided new supply chain insights and helped identify in U.S. tobacco agriculture. Informed by areas to further explore. The on-farm interviews provided the invaluable engagements with HRW, growers and opportunity of hearing from the workers directly. others, we evaluated opportunities to further address child labor concerns and We plan to expand these pilots in 2016 and apply our learnings to future have made changes beginning with our grower training and assessment programs. 2015 grower contracts. We remained engaged with Human Rights Watch as they continued to monitor and report on this issue.

Our contracts:

• establish a minimum age for employment at 16 subject to certain limited exceptions granted in compliance with local, state and federal law;

• require parental/legal guardian con- sent for those under 18 who wish to be hired to work on the farm; and

• require Good Agricultural Practices training for growers. Growers are then required to train their workers on components of the training, specifically regarding the prevention of Green Tobacco Sickness and heat

G4-DMA Indirect Economic Impacts, G4-DMA Procurement Practices, G4-DMA Supplier Envi- stress. ronmental Assessment, G4-EN33, G4-DMA Supplier Assessment for Labor Practices, G4-LA15, G4-HR1, G4-DMA Labor Practices Grievance Mechanisms, G4-DMA Supplier Human Rights Assessment, G4-DMA Human Rights Grievance Mechanisms, G4-SO11, G4-HR11

28 Altria: 2015 Corporate Responsibility Progress Report | Managing Our Supply Chain Responsibly G4-DMA Supplier Assessment for Labor Practices, G4-DMA Labor Practices Grievance Mechanisms

Comparison of Altria’s Tobacco Companies and U.S. Law

Altria’s Tobacco Companies’ Provision Grower Contracts U.S. Law

Minimum Age for Agricultural Employment 16 12

Minimum Age to Perform Hazardous Duties as Defined by the U.S. Department of Labor 18 16

Our Performance

Developing a diverse supplier base Promoting a strong culture of responsibility

Exceeded our diversity Helped lead a multi-stakeholder initiative that spend goal of nine percent delivered advanced training on labor management topics to almost 10,000 growers in 2015

Monitoring and assessing

325 100% Assessments completed Percentage of completed planned by third parties, GAP assessments of domestic including GAP assessments tobacco growers and social compliance audits

Number of completed pilots to improve 2 assessments of labor practices on farms

29 Altria: 2015 Corporate Responsibility Progress Report | Managing Our Supply Chain Responsibly G4-DMA Market Presence, G4-DMA Employment, G4-DMA Labor Practices Grievance Mechanisms, G4-DMA Non-Discrimination Developing Our Employees and Culture

Develop high-performing and engaged GOAL employees who help us continue to deliver superior results in the future

You need the best people to lead an industry for more than 30 years.

Our employees’ leadership and passion to succeed enabled us to create and grow some of the biggest brands in the largest tobacco categories, maintain superior trade relationships and drive shareholder value. That’s why our goal is to develop high-performing and engaged employees who help us continue to deliver superior results in the future. So we focus on: promoting a vibrant workplace; attracting, developing and retaining talented people; rewarding and recognizing our employees; and creating a safe workplace.

Promoting a Vibrant Workplace companies had opportunities in diversity and inclusion, innovation and simplification. Our employees have a voice. And when Altria’s leaders hear common feedback • About half of our employees thought throughout our companies, they devel- our leadership was committed to op plans to address it. In 2013, Altria’s diversity and inclusion. employee engagement survey revealed that although employee engagement • About half of our employees felt was high, employees believed our comfortable challenging the status quo.

Here’s How We Support Our Employee Goal

Creating a Safe Workplace

Rewarding & Promoting a Recognizing Vibrant Workplace Our Employees Engaged Superior Business Employees Results

Attracting, Developing & Retaining Talented People

30 Altria: 2015 Corporate Responsibility Progress Report | Developing Our Employees and Culture G4-DMA Diversity and Equal Opportunity, G4-DMA Equal Remuneration for Women and Men, G4-10, G4-LA12, G4 DMA Employment, G4-DMA Non-Discrimination

• Less than half of employees believed We are investing in this vision and our we were doing a good job removing 2015 accomplishments include: ineffective bureaucracy, like processes, obstacles and rules. • 56 percent of managers and 32 percent of salaried employees partic- Motivated by these opportunities and ipated in inclusion training. We have through a concerted effort over the last planned additional training events two years, our companies accomplished in 2016. some important milestones. • 65 percent of employees surveyed Diversity & Inclusion in 2015 believe we are making meaningful progress on diversity We’ve carved out a vision for Altria to and inclusion. be a place where we seek and value • 83 percent of salaried employees differences to drive our success. Each surveyed in 2015 believe Altria’s of us brings our own point of view to senior leaders are committed to our jobs. This can be shaped by our an environment of diversity and education, family and life experiences as inclusion. This is up from 71 percent well as our age, gender, race and other in 2013. factors. When we value these differences, we solve business problems better Not all differences are visible, but race and have a more open workplace. For and gender are two that can be easily example, we have established Employee measured. Measures of our workforce Resource Groups (ERGs), which bring through gender and race representation together diverse groups of employees. allow us to understand how our com- The insights provided by these groups panies are progressing and provide the allow us to better understand and opportunity to benchmark against peer connect with suppliers, adult consumers companies. Our companies’ progress on and each other. gender and race is one indicator of our overall progress on diversity and inclu- Diversity & sion. We understand that it is important Inclusion Goals for our company to make progress over the long-term.

Our leadership is Representation of Women diverse at all levels

2015 Δ vs. 2014 (December 31, 2015) All leaders seek and use Management 35% 0 ppt differences to drive results

Total Employees 37% +1 ppt Everyone feels included, heard and Representation of People of Color challenged to contribute 2015 Δ vs. 2014 (December 31, 2015) Our community Management 20% 0 ppt investments show our Total Employees 32% 0 ppt commitment to diversity and help attract diverse Note: The term “people of color” generally includes anyone identifying as Black/African American, Latino/a, or of Native American, Middle Eastern, or Asian/Pacific-Island descent, regardless of literal skin color. It is intended as an inclusive and respectful term, talent into our companies useful in broadly describing racial dynamics within groups.

Our suppliers’ diversity contributes to our Additionally, we measure gender and gauge where we stand with the diversity companies’ success race representation of individuals pro- of our future leadership. moted within our companies to help us

31 Altria: 2015 Corporate Responsibility Progress Report | Developing Our Employees and Culture

G4-11, G4-LA9, G4-DMA Labor/Management Relations, G4-DMA Training and Education, G4-LA10, G4 LA-11

Innovation In 2015 our companies Recruiting Innovation is more than just bringing invested approximately products to market. Innovation also We recruit talent with strong leadership happens by bringing ideas forward to do potential. Our companies have long- a job more efficiently. Over the last two standing recruiting relationships with 20 $10.3 M years: universities nationwide. Each year, we in training and offer approximately 200 students paid • We’ve defined key behaviors to drive co-ops or internships. Over half of our development programs innovation and introduced tools and eligible interns begin their careers with workshops to employees. We’ve Altria after they graduate. Our university hosted an innovation expo to recog- recruiting is complemented by our nize and inspire innovation in every efforts to hire experienced employees business area, shared success stories with demonstrated leadership capabil- of employees who have thought ities. differently and engaged our leaders in executive leadership programs. In 2015, Altria hired 462 new employees. Thirty nine percent were women and Maintaining Strong Simplification 33 percent were people of color helping Labor Relations improve the diversity of our workforce. Our companies have succeeded by Altria’s operating companies pro- finding ways to be more efficient. Our Development vide well-paying manufacturing ability to adapt has never been more and production jobs for employees important because of today’s changing We work in highly competitive and reg- in eight states. We respect the marketplace. Our employees are taking ulated industries and our development rights of our companies’ employ- initiative to streamline work and save programs build our employees’ capabili- ees who choose to be represented time and money. Our 2015 employee en- ties to take on business challenges. by a union. In fact, 25 percent gagement survey revealed progress. We of employees within our family saw a 21-point increase when we asked Examples include: of companies were represented employees if we were doing a good job through collective bargaining removing ineffective bureaucracy, like • Classroom and self-guided experien- agreements at the end of 2015. processes, obstacles and rules. tial sessions taught by experienced company leaders or by experts in a Altria’s operating companies have To reinforce our commitment to sim- variety of fields who challenge our an open dialogue and collaborate plification, we recognize employees’ assumptions and practices. with hourly employees and unions simplification accomplishments through representing them. Most hourly our Chairman’s Award. For example, last • Executive Leadership Development: employees operate in a team en- year we presented a Chairman’s Award Senior leader learning programs that vironment where they’re account- to employees who simplified our compa- build leadership skills and reinforce able for identifying and addressing nies’ budget process saving 10,000 Altria’s Mission and Leadership Mod- issues affecting day-to-day work. hours of work. Overall, our employees el. The program prepares executives have redesigned over 100 processes. to manage our companies’ core All union-represented employees businesses while innovating for the across PM USA and USSTC are cov- future. ered by Long-Term Agreements. Attracting, Developing & These agreements, which are in Retaining Talented People • Manufacturing Leadership Forum: addition to basic collective bar- Structured programs for hourly and gaining agreements, provide Al- Employees want challenging, meaning- salaried manufacturing employees tria’s tobacco companies and their ful work where they can make decisions that teach Altria’s leadership respon- hourly employees with security that matter while developing their sibilities and Values. against business disruptions that careers. We provide these opportunities, sometimes occur during labor dis- including internships and diverse • Brand Management Leadership putes and provide annual bonuses assignments designed to stretch capa- Training: A system of interactive train- ranging from $800 to $1200. bility, apply keen judgment and manage ing classes that teach skills to be a diverse stakeholder perspectives. successful marketer with a focus on responsibly connecting our tobacco

32 Altria: 2015 Corporate Responsibility Progress Report | Developing Our Employees and Culture G4-DMA Local Communities, G4-SO1, G4-DMA Equal Remuneration for Women and Men, G4-LA1

brands to adults who use them. each employee’s career and gives them Several recent, • Educational Refund Program: Rein- an opportunity to become an active forces the importance of continuing participant in the process by formalizing independent education for employees and rep- their career aspirations and building resents our commitment to develop plans to achieve them. benefits individual potential and increase job skills. benchmarking Rewarding & Recognizing When employees join our companies, Our Employees studies have they have immediate access to tools to build their capability. The Performance Our compensation program helps us confirmed that Partnership Process is at the center of attract, retain and motivate world-class our Talent System for salaried em- talent. Total compensation can include Altria and its ployees. Employees receive ongoing different elements — base pay, annual feedback from their managers about cash incentives, long-term stock and companies offer their development, performance, career cash incentives, and benefits. We want advancement and growth opportunities. to provide total compensation packages some of the most During this process, employees set indi- between the 50th and 75th percentile vidual performance objectives connect- of our peer companies to recognize comprehensive ed to our company’s Mission and Values. our employees for their outstanding In 2015, 100 percent of salaried employ- work. For most employees, we currently and competitive ees participated in the Performance deliver compensation packages at these Partnership Program. levels. benefits within

Salaried employees create an annual Our employee recognition program pro- the Fortune 500. development plan with their manager vides a tool for peer-to-peer recognition Click here to learn more. that helps them set and work toward for superior work. Whether it comes as career aspirations and development just a note or as a tangible recognition milestones. The plan is an investment in gift, a simple “thanks” for a job well done

Altria Company Positively Impacting Richmonders for Decades

Spend just one hour in Philip Morris USA’s Manufacturing stories have been passed down since the manufacturing center Center, and you’ll feel it. Employees are more than just co-work- first opened its doors. PM USA gives employees a great place to ers. This kind of environment makes PM USA a special place to work, providing them stable manufacturing jobs that have giv- work for those in Richmond. And if you ask PM USA employees’ en them opportunities they wouldn’t have working anywhere family members, they’ll tell you how proud they are that their else. For example, Roger, a PM USA Direct Materials employee, family member works here and how thankful they are for the put his wife and children through college while employed at PM opportunities it provides. But this isn’t new. PM USA manufac- USA. According to Roger, “I wouldn’t have been able to do that turing in Richmond has been around for decades, and similar without working here.”

33 Altria: 2015 Corporate Responsibility Progress Report | Developing Our Employees and Culture G4-DMA Occupational Health and Safety, GR-LA5, G4-LA6

Creating a Safe Workplace

Our safety goal is simple — for all employees to have an injury-free career. We’re committed to occupational injury and illness prevention and to full compliance with laws and regulations relating to employee safety and health.

We continually update our policies, procedures and equipment as new devel- opments occur in safety and health, as advances are made in technology and as market conditions change. Achiev- ing this goal requires each employee to commit to an injury-free career by complying with safety requirements, performing job duties in a safe manner and watching those around them each day.

Our “Injury-Free Career Culture” is an effort to eliminate injuries and fully engage employees in safety by:

• communicating safety through all avenues;

• applying internal safety requirements/guidelines;

• applying training in the workplace;

• participating in safety initiatives and the development of best practices;

• planning safety into the business processes;

• recognizing and celebrating strong safety performance; and

• enforcing safety fairly and consistently.

Our key performance indicators for workplace safety include:

• A 92 percent composite score for safety assessment performance in our facilities, up one percentage point from 2014.

• An OSHA recordable injury rate of 2.6, slightly better than the benchmark for U.S. manufacturing, and a lost day rate of 1.3, slightly more than the benchmark for U.S. manufacturing.

34 Altria: 2015 Corporate Responsibility Progress Report | Developing Our Employees and Culture Our Performance Promoting a vibrant workplace

81% 65%

Percentage of Altria’s salaried Percentage of employees workforce that is engaged, based on surveyed in 2015 that believe Altria Altria’s 2015 employee engagement is making meaningful progress survey on diversity and inclusion Altria outperforms other Fortune 500 companies on average by 10 points

84% 64%

Percentage of salaried employees Percentage of salaried employees surveyed in 2015 that would surveyed in 2015 that feel safe recommend the company as challenging the status quo, a a great place to work 13 point increase over 2013

Developing talent

Amount our companies invested ~$10.3 M in training and development programs

Creating a safe workplace

Our facilities’ safety assessment composite score 92% for performance (Up 1 percentage point from 2014) 2.6 1.3 Altria’s OSHA recordable injury rate Altria’s OSHA lost day rate

This rate is slightly better than the This rate is slightly more than the benchmark for U.S. manufacturing benchmark for U.S. manufacturing

35 Altria: 2015 Corporate Responsibility Progress Report | Developing Our Employees and Culture G4-33

Independent Assurance Statement to Altria Group, Inc. Appendix A: Environmental Assurance Letter

ERM Certification and VerificationIndependent Services, Inc Assurance(ERM CVS) was Statement engaged by to Altria Altria Group, Group, Inc. (Altria) Inc. to provide assurance in relation to the GHG, water and waste consolidated data set out below for calendar year 2015. Engagement Summary ERM Certification and Verification Services, Inc (ERM CVS) was engaged by Altria Group, Inc. (Altria) to provide assurance in relation to the GHG, Whetherwater and the waste consolidated consolidated corporate data data set for out calenda belowr foryear calendar 2015 set year out 2015.in the 2015 Altria Environmental Metrics Table dated April 8, 2016 for the followingEngagement indic atorsSummary are, in all material respects, appropriately presented: • Whether Energy the Useconsolidated (BTUs) corporate data for calendar year 2015 set out in the 2015 Altria Environmental Metrics Table dated April 8, 2016 for the following indicators are, in all material respects, appropriately presented: • GHG emissions: • Energyo Use Scope (BTUs) 1 Direct GHG emissions from on-site fossil fuel combustion and refrigerant gases; and • GHG emissions:emissions from sales vehicles and company-controlled aircraft (tonnes CO2e) o o Scope 12 DirectIndirect GHG GHG emissions emissions from from on-site purchased fossil elecfueltricity combustion (tonnes and CO refrigerant2e) gases; and emissions from sales vehicles and company-controlled aircraft (tonnes CO2e) Scope: o Scope 3 Other Indirect GHG emissions from global air travel and rented vehicles (tonnes CO2e) o • Waste disposed Scope to2 Indirectlandfill (millions GHG emissions of pounds) from purchased electricity (tonnes CO2e) o Scope 3 Other Indirect GHG emissions from global air travel and rented vehicles (tonnes CO e) Scope: • Waste recycled, composted, converted to fuel or reused (millions of pounds) 2 • Waste disposed to landfill (millions of pounds) • Hazardous waste generated (short tons) • Waste recycled, composted, converted to fuel or reused (millions of pounds) • Water Consumption (millions of gallons) • ‘Appropriately Hazardous presented’ waste generated means we (short have tons) assessed the selected data for reliability which includes: completeness (whether• Water all Consumptionrelevant sources (millions were ofcaptured); gallons) comparability (across locations and over time); and accuracy of calculations (including the use of appropriate formulae, conversion factors, estimates and assumptions). ‘Appropriately presented’ means we have assessed the selected data for reliability which includes: completeness Reporting Criteria (whetherAltria’s internal all relevant environmental sources were reporting captured); processes compa, includingrability (across GHG data locations based and on theover World time); Resources and accuracy Institute of used: andcalculations the World (including Business the Council use of for appropriate Sustainable form Deveulae,lopment conversion (WRI/WBCSD) factors, estimates GHG Protocol and assumptions (2004) ). Assurance Reporting Criteria Altria’sERM CVS’s internal Assurance environmental Methodology, reporting which processes is based, including on ISO14064:3 GHG data for based GHG emissionson the World verification Resources Institute used:Standard used: and the World Business Council for Sustainable Development (WRI/WBCSD) GHG Protocol (2004)

Assurance level: Limited assurance ERM CVS’s Assurance Methodology, which is based on ISO14064:3 for GHG emissions verification Standard used: Altria is responsible for preparing the data in the 2015 Altria Environmental Metrics Table and for the collection and RespectiveAssurance level: Limitedpresentation assurance of the information within it. responsibilities: AltriaERM CVS’sis responsible responsibility for preparing is to provide the data conclusions in the 2015 on Altriathe agreed Environmental scope based Metrics on theTable assurance and for thactivitie collectiones and performed and exercising our professional judgement. Respective presentation of the information within it. responsibilities: ERM CVS’s responsibility is to provide conclusions on the agreed scope based on the assurance activities performed and exercising our professional judgement. Our conclusions The limitations of our engagement

Based on our activities, nothing has come to our attention to The reliability of the assured data is subject to inherent uncertainties, given the available methods for determining, indicateOur conclusions that the 2015 environmental data for the indicators listed The limitations of our engagement under ‘Scope’ above, are not appropriately presented according calculating or estimating the underlying information. It is toBased the reporting on our activities, criteria. nothing has come to our attention to importantThe reliability to understand of the assured our assurancedata is subject conclusions to inherent in this indicate that the 2015 environmental data for the indicators listed context.uncertainties, given the available methods for determining, Ourunder assurance ‘Scope’ above, activities are not appropriately presented according calculating or estimating the underlying information. It is Ourimportant Observations to understand our assurance conclusions in this Weto the planned reporting and criteria. performed our work to obtain all the information Withoutcontext. affecting the conclusions presented above, we have the andOur explanationsassurance activities that we believe were necessary to provide a basis for our assurance conclusions. followingOur Observations key observation: We planned and performed our work to obtain all the information • The data management system (EMIS) still involves Aand team explanations of GHG and that assurance we believe specialists were necessary performed to provide the a Without affecting the conclusions presented above, we have the extensive manual data transfer, and therefore demands a followingbasis for ouractivities: assurance conclusions. following key observation: strong focus in internal validation and assurance. • • A team Interviews of GHG withand assurancerelevant staff specialists to understand performed Altria’s the internal The. data management system (EMIS) still involves followingreporting activities: processes, including the use of its EMIS extensive manual data transfer, and therefore demands a database, for each indicator. strong focus in internal validation and assurance. • Interviews with relevant staff to understand Altriand a’sevaluate internal . thereporting data management processes, including systems the and use processes of its EMIS (includin g datadatabase, collection for each and indicator.internal review processes) used for • Interviewscollecting and with reporting relevant thestaff data. to understand and evaluate • Athe review data managementof the calculations systems undertaken, and processes including (includin g conversiondata collection factors and andinternal emission review factors processes) used used for • Visitscollecting to two and production reporting facilities,the data. including the Park 500 , • Aand review Ste Michelle of the calculations Wine Estates undertaken, (SMWE) including to review Melanie Eddis, Partner environmentalconversion factors records and andemission documents factors related used to the data 13 April 2016 • AVisits visit toto twothe productionhead office facilities, in Richmond, including VA, theto rev Parkiew 500the , ERM Certification and Verification Services, Inc EMISand Ste database Michelle and Wine interview Estates relevant (SMWE) personnel. to review Melanie Eddis, Partner • Anenvironmental analytical review records of andthe consolidateddocuments related year end to thedata data www.ermcvs.com13 April 2016 • Asubmitted visit to the by headall sites office for inthe Richmond, relevant KPIs. VA, to review the Email:ERM Certification [email protected] and Verification Services, Inc EMIS database and interview relevant personnel. • An analytical review of the consolidated year end data www.ermcvs.com submitted by all sites for the relevant KPIs. Email: [email protected]

Declaration of Independence: ERM CVS is a member of the ERM Group and an accredited Certification Body. The work that ERM CVS conducts for clients is solely related to independent assurance activities and auditor training. Our processes are designed and implemented to ensure that the work we undertake with clients is free from bias and conflict of interest. ERM CVS and the staff that have undertaken workDeclaration on this assuranceof Independence exercise: ERM provide CVS no is consulta a memberncy ofrelated the ERM services Group to andAltria an in accre any respect.dited Certification Body. The work that ERM CVS conducts for clients is solely related to independent assurance activities and auditor training. Our processes are designed and implemented to ensure that the work we undertake with clients is free from bias and conflict of interest. ERM CVS and the staff that have undertaken work on this assurance exercise provide no consultancy related services to Altria in any respect. 36 Altria: 2015 Corporate Responsibility Progress Report | Appendix A: Environmental Assurance Letter G4-33

Appendix A: Environmental Assurance Letter

Appendix 1: Assured data (as reported in the 2015 Altria Environmental Metrics Table dated April 8th, 2016)

Indicator Amount Unit of measure

Energy use 4,966 Billions of BTUs

Scope 1 GHG emissions* 192,293 Metric tonnes

208,722(location based) Scope 2 GHG emissions** 204,900 (market based) Metric tonnes

Scope 3 GHG emissions*** 10,641 Metric tonnes

Water consumption 2,783 Millions of gallons

Waste disposed at landfill 28.3 Millions of pounds Waste recycled, composted, converted to fuel or reused 71.9 Millions of pounds

Hazardous waste 98 Short tons

* Scope 1 Direct GHG emissions from on-site fossil fuel combustion and refrigerant gases; and emissions from sales vehicles and company-controlled aircraft (tonnes CO2e)

** Scope 2 Indirect GHG emissions from purchased electricity (tonnes CO2e)

*** Scope 3 Other Indirect GHG emissions from global air travel and rented vehicles (tonnes CO2e)

ERM CERTIFICATION AND VERIFICATION SERVICES INC 37 Altria: 2015 Corporate Responsibility Progress Report | Appendix A: Environmental Assurance Letter G4-24, G4-26, G4-27

Appendix B: Stakeholder Engagement

Stakeholder Group Why We Engage How We Engage

Investors To communicate our business results • Annual Shareholder Meetings and how we achieved those results, • Investor including our approach to responsibility. • Road shows We also engage with investors to under- • Meetings stand their interests and expectations. • Conferences • Surveys • Earnings calls

Suppliers / Growers To convey our expectations and shared • Supplier scorecards goals to promote the procurement of • Supplier meetings high-quality products, services, and mate- • Assessments, audits and surveys rials that support our business objectives. • Meetings between company grower We also work to understand and collabo- representatives and growers rate on effective ways to resolve risks and • Workshops and training events societal issues within our supply chain.

Government and Regulatory To share our company’s public policy po- • Meetings with elected and appointed Agencies sitions on issues important to us. As our officials and staff industries are subject to a range of laws • Regulatory submissions and regulations, we engage constructive- • Workshop participation ly with government officials and regulato- • Facility tours ry agencies to maintain compliance and • Trade associations help achieve business objectives. • Public policy organizations

Public Health and Scientific Com- To understand and share research and • Meetings munity perspectives on tobacco product issues • Conferences and workshops to inform and advance our approach to • Research publications tobacco harm reduction and effective regulation.

Trade Partners To help our trade partners strengthen • “Top-to-Top” meetings their businesses and ours by offering • Visits with retailers category management solutions that • Online tools promote mutual success. We work to • Annual trade meetings understand the Trade’s feedback on retail and wholesale programs supporting the marketing of our products. We also work with them to better understand marketplace dynamics and the preferences of adult consumers.

Consumers To listen and engage with our adult • Consumer hotlines consumers to develop insights that will • Consumer insights research help deliver new and innovative products • Brand and corporate websites and brand experiences that exceed their • Direct-to-consumer communications expectations.

Employees To help employees understand the • Town hall meetings led by senior company’s strategies, the competitive leaders landscape and how they contribute to • Engagement survey the company’s success. We seek input • Intranet communications, including from and engage with our employees interactive discussion forums to improve their overall work experience • Newsletters and inspire them to innovate, do things • Functional, departmental and team more simply, be more inclusive and win meetings in the marketplace. • Labor negotiations

Community Partners / Grantees To collaborate on issues important to our • Meetings communities so that we can invest our • Grantee forums resources and time in a way that helps • Service on boards and in other leader- make our communities and businesses ship roles stronger. We work to address relevant • Employee volunteer service social and environmental concerns in partnership with others.

38 Altria: 2015 Corporate Responsibility Progress Report | Appendix B: Stakeholder Engagement G4-27

Appendix B: Stakeholder Engagement

Examples of outcomes from some of these engagements include:

Suppliers/Growers: In 2015, following a successful 2014 pilot, the Farm Labor Practices Group, of which Altria is a found- ing member, rolled out Enhanced Labor Training as a GAP Connections training component on best practices in three areas: crop, environmental and labor management. Our growers tell us that these programs provide the tools they need to succeed and meet contractual and legal requirements. Government and Regulatory Agencies: We have advocated for legislation establishing a minimum legal age to purchase e-vapor products. Fifteen states passed such laws in 2014 and six enacted them in 2015, bringing the total to 48 states. Trade Partners: Our proprietary reporting system provides relevant store-level data for the tobacco categories. We can show them how many stores are gaining or losing market share at an aggregate and store level. Then our sales team works with the retailer on how to capitalize on those insights to build their business. Consumers: We use market and consumer research to deeply understand our consumers and their preferences. In 2015, Philip Morris USA expanded their age-verified one-to-one digital communications to include the launch of mobile apps and mobile couponing. Employees: In the fall of 2015, we hosted “Be: 2015,” a one day event where employees were immersed in our cultural initiatives. Through guest speakers, workshops and activities, we celebrated our success, built new skills and inspired employees to further contribute to our culture initiatives.

39 Altria: 2015 Corporate Responsibility Progress Report | Appendix B: Stakeholder Engagement G4-DMA Market Presence, G4-DMA Indirect Economic Impacts, G4-DMA Procurement Practices, G4-DMA Supplier Environmental Assessment, G4-DMA Employment, G4-DMA Labor/Management Relations, G4-DMA Diversity and Equal Opportunity, G4-DMA Equal Remuneration for Women and Men, G4-DMA Supplier Assessment for Labor Practices, G4-DMA Labor Practices Grievance Mechanisms, G4-DMA Investment, G4-DMA Non-Discrimination, G4-DMA Freedom of Association and Collective Bargaining, G4-DMA Child Labor, G4-DMA Forced and Compulsory Labor, G4-DMA Supplier Human Rights Assessment, G4-DMA Human Rights Grievances Mechanism, G4-DMA Local Communities, G4-DMA Supplier Assessment for Impacts on Society, G4-DMA Customer Health and Safety, G4-DMA Product and Service Labeling, G4-DMA Marketing Communications, G4-18, G4-19, G4-20, G4-21

Appendix C: Analysis of Material Topics

Reducing the Harm of Tobacco Products Marketing Responsibly

Aspects Aspects • Product Innovation • Marketing practices • Science and Research • Compliance • Regulatory Engagement • Health Communications • Tobacco Cessation • Underage Tobacco Prevention

Business Case and Our Focus Business Case and Our Focus Most of Altria’s revenue comes from the sale of its tobacco Altria’s companies are owners of leading brands in their indus- companies’ products. The use of tobacco products, however is tries. At the same time, tobacco products are among the most a significant public health concern, as underscored by the 2014 heavily regulated consumer goods in the world. These products Surgeon General’s Report on tobacco and health. are subject to extensive federal, state and local licensing, registration and minimum age requirements. These requirements became more extensive with the 2009 federal law — which we To address stakeholder concerns and succeed in the future, supported — granting the FDA authority to regulate virtually all we need to continue to work to reduce the harm of tobacco aspects of tobacco product manufacturing, sales, distribution products. Developing less harmful products under the Food and and marketing. Driven by underage tobacco use concerns, Drug Administration’s oversight, communicating health effects, some stakeholders routinely scrutinize tobacco marketing prac- helping prevent underage use and supporting cessation all tices and call for increased restrictions. can reduce the harm caused by tobacco products. Reasonable and science-based regulation that recognizes the importance To continue to be successful in the marketplace, our companies of harm reduction will encourage product innovation and the are focused on building relationships between brands and their development of lower-risk tobacco products that meet evolving adult consumer audiences while taking steps designed to limit adult tobacco consumers’ preferences. reach to unintended audiences.

Internal Boundary Internal Boundary • Altria’s Tobacco Companies • All Altria Companies, excluding Philip Morris Capital Corpora- tion

External Boundary External Boundary • Consumers • Consumers • Regulators • Trade Partners • Public Health Community • Marketing Suppliers • Trade Partners • Youth and Youth-Serving Organizations

40 Altria: 2015 Corporate Responsibility Progress Report | Appendix C: Analysis of Material Topics G4-DMA Market Presence, G4-DMA Indirect Economic Impacts, G4-DMA Procurement Practices, G4-DMA Supplier Environmental Assessment, G4-DMA Employment, G4- DMA Labor/Management Relations, G4-DMA Diversity and Equal Opportunity, G4-DMA Equal Remuneration for Women and Men, G4-DMA Supplier Assessment for Labor Practices, G4-DMA Labor Practices Grievance Mechanisms, G4-DMA Investment, G4-DMA Non-Discrimination, G4-DMA Freedom of Association and Collective Bargaining, G4-DMA Child Labor, G4-DMA Forced and Compulsory Labor, G4-DMA Supplier Human Rights Assessment, G4-DMA Human Rights Grievances Mechanism, G4-DMA Local Communities, G4-DMA Supplier Assessment for Impacts on Society, G4-DMA Customer Health and Safety, G4-DMA Product and Service Labeling, G4-DMA Marketing Com- munications, G4-18, G4-19, G4-20, G4-21

Appendix C: Analysis of Material Topics

Managing Our Supply Chain Responsibly Developing Our Employees and Culture

Aspects Aspects • Relationship Management • Talent Attraction and Retention • Diversity • Development and Capability Building • Standards and Compliance • Diversity • Monitoring and Assessments • Compensation and Benefits • Labor Management and Human Rights • Safety

Business Case and Our Focus Business Case and Our Focus Altria relies on thousands of suppliers to operate effectively and Altria’s long success is attributable to its culture and talented with quality. And, maintaining a diverse supplier base can en- people. Our companies operate in highly regulated, dynamic courage new perspectives and innovative solutions. At the same and, in the case of tobacco, controversial industries. The tobac- time, companies are increasingly being held accountable for the co industry is changing and growing more complex. Society actions of their suppliers and are expected to contribute to ad- continues to change and become more diverse. Generational dressing societal concerns associated with their supply chains. shifts are occurring, and workplace norms are changing. In addi- Stakeholders have raised labor issues in the tobacco supply tion, our employees have shared feedback on ways to improve chain through shareholder resolutions and direct outreach with our organization and culture. our company. In addition, the company’s supply chain continues to evolve. This ongoing change requires us to be attentive These changes require new skills and perspectives. We’re to new expectations. responding to employee feedback and equipping them to meet new challenges, including fostering a culture and building skills focused on innovation, simplification and diversity and inclusion. To have a secure, high-quality and reliable source of materials Our success depends on our ability to attract, develop and and services, it’s important to work to resolve risks and societal retain a diverse and talented workforce motivated and capable issues within the supply chain. of meeting business challenges today and tomorrow.

Internal Boundary Internal Boundary • All Altria Companies • All Altria Companies

External Boundary External Boundary • Suppliers • Prospective Employees

41 Altria: 2015 Corporate Responsibility Progress Report | Appendix C: Analysis of Material Topics GRI G4 Content Index

The report is guided by the Global Reporting Initiative, in accordance with the GRI G4 Core Option. The index covers Altria’s four responsibility priorities: Reducing the Harm of Tobacco Products, Marketing Responsibly, Managing Our Supply Chain Responsibly and Developing Our Employees and Culture. The index has also been extended to cover the environmental impact as well and links to content on Altria.com.

General Standard Disclosures

General Standard Page External Description Disclosures Assurance

Strategy and Analysis

G4-1 Chairman’s Letter (page 2) Statement from the most senior decision-maker about relevance of sustainability to organizations

Organizational Profile

G4-3 Altria Group, Inc. Report on the name of the organization

G4-4 Corporate Profile (pages 6-7) Report on the primary brands, products & services

G4-5 6601 W. Broad St., Richmond, VA Report on the location of the organization’s headquarters 23230

G4-6 Corporate Profile (pages 6-8) Report the number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report

G4-7 2015 Annual Report (Altria.com) Report on the nature of ownership and legal form (pages 1-4)

G4-8 Corporate Profile (pages 6-7) Report the markets served

G4-9 Corporate Profile (pages 6-7 ) Report the scale of the organization, including; total number of employees, total number of operations, net revenues, quality of products, or services provided

G4-10 Corporate Profile (page 7) • Report the total number of employees by employment contract and gender; Developing Our Employees and • Report the total number of permanent employees by Culture (page 31) employment type and gender; • Report the total workforce by employees and supervised workers and by gender; • Report the total workforce by region and gender; • Report whether a substantial portion of the organization’s work is performed by workers who are legally recognized as self-employed, or by individuals other than employees or supervised workers, including employees and supervised employees of contractors.

G4-11 Developing Our Employees and Report the percentage of total employees covered by Culture: Maintaining Strong collective bargaining agreements Labor Relations (page 32)

G4-12 Corporate Profile: Our Value Describe the organization’s supply chain Chain (page 9)

42 Altria: 2015 Corporate Responsibility Progress Report | GRI G4 Content Index General Standard Page External Description Disclosures Assurance

G4-13 2015 Annual Report and Form Report any significant changes during the reporting period 10-K (Altria.com) (Part 1, Item 1 regarding the organization’s size, structure, ownership, or its Business, page 1) supply chain, including: • Changes in the location of, or changes in, operations, including facility openings, closings, and expansions; • Changes in the share of capital structure and other capital formation, maintenance, and alteration operations; and • Changes in the location of suppliers, the structure of the supply chain, or in relationships with suppliers, including selection and termination.

G4-14 Environmental Management Report whether and how the precautionary approach or (Altria.com) principle is addressed by the organization

G4-15 Human Rights Framework (Altria. List externally developed economic, environmental and com) social charters, principles, or other initiatives to which the organization subscribes or which it endorses Our Approach (page 10)

G4-16 Engaging with Others (Altria. List memberships of associations (such as industry associa- com) tions) and national or international advocacy organizations in which the organization: • Holds a position on the governance body; • Participates in projects or committees; • Provides substantive funding beyond routine membership dues; and • Views membership as strategic.

Identified Material Aspects and Boundaries

G4-17 2015 Annual Report and Form • List all entities included in the organization’s consolidated 10-K (Altria.com) (pages 1-4 of financial statements or equivalent documents 2015 Annual Report; page 1 of • Report whether any entity included in the organization’s Form 10-K) consolidated financial statements or equivalent documents is not covered by the report About this Report (inside cover)

G4-18 Our Approach (page 11) • Explain the process for defining the report content and the Aspect Boundaries Appendix C (pages 40-41) • Explain how the organization has implemented the Reporting Principles for Defining Report Content

G4-19 Our Approach (page 11) List all the material Aspects identified in the process for defining report content Appendix C (pages 40-41)

G4-20 Our Approach (page 11) For each material Aspect, report the Aspect Boundary within the organization, as follows: Appendix C (pages 40-41) • Report whether the Aspect is material within the organization. • If the Aspect is not material for all entities within the organization (as described in G4-17), select one of the following two approaches and report either: • The list of entities or groups of entities included in G4- 17 for which the Aspect is not material; or • The list of entities or groups of entities included in G4- 17 for which the Aspects is material. • Report any specific limitation regarding the Aspect Boundary within the organization.

43 Altria: 2015 Corporate Responsibility Progress Report | GRI G4 Content Index General Standard Page External Description Disclosures Assurance

G4-21 Our Approach (page 11) For each material Aspect, report the Aspect Boundary outside the organization, as follows: Appendix C (pages 40-41) • Report whether the Aspect is material outside the organization; • If the Aspect is material outside the organization, identify the entities, groups of entities or elements for which the Aspect is material. In addition, describe the geographical location where the Aspect is material for the entities identified; and • Report any specific limitation regarding the Aspect Boundary outside the organization.

G4-22 We have no restatements to Report on the effect of any restatements of information report. provided in previous reports and the reason for such restatements

G4-23 We have no significant changes Report significant changes from previous reporting periods from our previous reporting in the in the Scope and Aspect Boundaries scope and boundaries.

Stakeholder Engagement

G4-24 Appendix B (page 38) Provide a list of stakeholder groups engaged by the organization

G4-25 Our Approach: Understanding Report the basis for identification and selection of stake- Stakeholders’ Perspectives holders with whom to engage (pages 10-11)

G4-26 Report the organization’s approach to stakeholder engage- Appendix B (page 38) ment, including frequency of engagement by type and by stakeholder group, and an indication of whether any of the engagement was undertaken specifically as part of the report preparation process

G4-27 Appendix B (pages 38--39) Report key topics and concerns that have been raised through stakeholder engagement, and how the organi- Our Approach (pages 10-11) zation has responded to those key topics and concerns, including through its reporting. Report the stakeholder groups that raised each of the key topics and concerns

Report Profile

G4-28 About This Report (inside cover) Reporting period (such as fiscal or calendar year) for information provided

G4-29 4-May-15 Date of the most recent report (if any)

G4-30 Annual Reporting cycle (such as annual, biennial)

G4-31 Contact Us (Altria.com) Provide contact point for questions regarding the report or its contents

G4-32 This is a GRI G4 Core Option • Report the “in accordance” option the organization has report. chosen. • Report the GRI Content Index for the chosen option. • Report the reference to the External Assurance Report, if the report has been externally assured. GRI recommends the use of external assurance, but it is not a requirement to be “in accordance” with the Guidelines.

44 Altria: 2015 Corporate Responsibility Progress Report | GRI G4 Content Index General Standard Page External Description Disclosures Assurance

G4-33 Appendix A (pages 36-37) Yes, pages 36-37 • Report the organization’s policy and current practice with regard to seeking external assurance for the report. • If not included in the assurance report accompanying the sustainability report, report the scope and basis of any external assurance provided. • Report the relationship between the organization and the assurance providers. • Report whether the highest governance body or senior executives are involved in seeking assurance for the organization’s sustainability report.

Governance

G4-34 Board Committees: Nominating, Report the governance structure of the organization, includ- Corporate Governance & Social ing committees of the highest governance body. Identify Responsibility Committee (Altria. committees responsible for decision-making on economic, com) environmental, and social impacts

Our Approach (page 10)

Ethics and Integrity

G4-56 Compliance & Integrity (Altria. Describe the organization’s Values, principles, standards and com) norms of behavior such as codes of conduct and codes of ethics Our Approach (page 10)

45 Altria: 2015 Corporate Responsibility Progress Report | GRI G4 Content Index Specific Standard Disclosures

DMA and Page Omissions External Description Indicators Assurance

Economic (Category)

Economic Performance (Material Aspect)

G4-DMA 2015 Annual Report and Form Disclosure on Management Approach for Aspect 10-K (Altria.com) (page 2-3 of Annual Report)

Our Approach (pages 10-11)

G4-EC1 Corporate Profile (page 7) Direct economic value generated and distributed

G4-EC2 2015 Annual Report and Form Financial implications and other risks and op- 10-K (Altria.com) (page 29) portunities for the organization’s activities due to climate change

G4-EC3 2015 Annual Report and Form Coverage of the organization’s defined benefit 10-K (Altria.com) (pages 16, 46) plan obligations

G4-EC4 We do not receive any financial Financial assistance received from government assistance from government

Market Presence (Material Aspect)

G4-DMA Developing Our Employees and Disclosure on Management Approach for Aspect Culture (page 30)

Appendix C (pages 40-41)

G4-EC5 Altria Weighted Ratio of entry level Not applica- Ratios of standard entry level wage by gender wage to minimum wage = 3.71 ble: Significant compared to local minimum wage at significant locations of locations of operation operations - nearly all employees are U.S. based

Indirect Economic Impacts (Material Aspect)

G4-DMA Appendix C (pages 40-41) Disclosure on Management Approach for Aspect

Managing Our Supply Chain Responsibly (pages 24-28)

Marketing Responsibly (pages 20-21)

G4-EC8 Marketing Responsibly (page 21) Significant indirect economic impacts, including the extent of impacts

Procurement Practices (Material Aspect)

G4-DMA Managing Our Supply Chain Disclosure on Management Approach for Aspect Responsibly (pages 24-28)

Appendix C (pages 40-41)

46 Altria: 2015 Corporate Responsibility Progress Report | GRI G4 Content Index Specific Standard Disclosures

DMA and Page Omissions External Description Indicators Assurance

G4-EC9 Approximately 87 percent 2015 Proportion of spending on local suppliers at signifi- domestic supplier spend out cant locations of operation of total 2015 supplier spend, excluding SMWE, PMCC, resolution expenses, tax payments, etc. Spend with a domestic entity with an international parent is reflected as domestic spend.

Environmental (Category)

Energy (Material Aspect)

G4-DMA Environmental Management Disclosure on Management Approach for Aspect (Altria.com)

G4-EN3 Environmental Management: Yes, pages 36-37 Energy consumption within the organization Environmental Goals (Altria.com)

CDP.net: 2015 CDP Water Re- sponse, question CC11.2 Will update with 2016 Response when published

G4-EN6 Environmental Management: Reduction of energy consumption Environmental Goals (Altria.com)

Water (Material Aspect)

G4-DMA Environmental Management Disclosure on Management Approach for Aspect (Altria.com)

G4-EN8 CDP.net: 2015 CDP Water Re- Total water withdrawal by source sponse, question W1.2a Will update with 2016 Response when published

G4-EN9 CDP.net: 2015 CDP Water Water sources significantly affected by withdrawal Response, question W1.2a 2.4a, of water 2.6, 2.7 Will update with 2016 Response when published

Biodiversity (Material Aspect)

G4-DMA Preserving the Waterway (Altria. Disclosure on Management Approach for Aspect com)

Environmental Management (Altria.com)

Investing in Communities: Pro- tecting the Environment (Altria. com)

G4-EN12 Environmental Management Description of significant impacts of activities, (Altria.com) products, and services on biodiversity in protected areas and areas of high biodiversity value outside the protected areas

47 Altria: 2015 Corporate Responsibility Progress Report | GRI G4 Content Index Specific Standard Disclosures

DMA and Page Omissions External Description Indicators Assurance

Emissions (Material Aspect)

G4-DMA Environmental Management Disclosure on Management Approach for Aspect (Altria.com)

G4-EN15 192,293 tonnes Yes, pages 36-37 Direct greenhouse gas (GHG) emissions (Scope 1)

CDP.net: 2015 CDP Water Re- sponse, question CC8.2 Will update with 2016 Response when published

G4-EN16 208,722 tonnes Yes, pages 36-37 Energy indirect greenhouse gas (GHG) emissions (Scope 2) CDP.net: 2015 CDP Water Re- sponse, question CC8.3 Will update with 2016 Response when published

G4-EN17 CDP.net: 2015 CDP Climate Yes, pages 36-37 Other indirect greenhouse gas (GHG) emissions Response, Question CC14.1 (Scope 3) Will update with 2016 response when published

G4-EN19 Environmental Management Reduction of greenhouse gas (GHG) emissions (Altria.com)

Effluents and Waste (Material Aspect)

G4-DMA Environmental Management Disclosure on Management Approach for Aspect (Altria.com)

G4-EN23 Environmental Management Currently unavail- Yes, pages 36-37 Total weight of waste by type and disposal (Altria.com) able: Other break- method Waste disposed at landfill: 28.3 downs - waste million pounds currently Waste recycled, composted, used reported in select as fuel or reused: 71.9 million categories pounds Hazardous waste: 98.0 short tons

Products and Services (Material Aspect)

G4-DMA Environmental Management Disclosure on Management Approach for Aspect (Altria.com)

Our Business Approach, Recycling and the Environment (Nu-Mark.com)

Reducing Our Environmental Impact (PMUSA.com)

G4-EN27 Environmental Management: Cig- Extent of impact mitigation of environmental arette Litter Prevention Program impacts of products and services (Altria.com)

G4-EN28 Recycling Battery Program (Nu- Currently un- Percentage of products sold and their packaging Mark.com) available: Other materials that are reclaimed, by category product data

48 Altria: 2015 Corporate Responsibility Progress Report | GRI G4 Content Index Specific Standard Disclosures

DMA and Page Omissions External Description Indicators Assurance

Compliance (Material Aspect)

G4-DMA Environmental Management Disclosure on Management Approach for Aspect Framework (Altria.com)

G4-EN29 We did not receive any fines Monetary value of significant fines and total num- or non-monetary sanctions for ber of non-monetary sanctions for non-compli- non-compliance with environmen- ance with environmental laws and regulations tal laws and regulations.

Supplier Environmental Assessment (Material Aspect)

G4-DMA Appendix C (pages 40-41) Disclosure on Management Approach for Aspect

Managing Our Supply Chain Responsibly (pages 25-28)

G4-EN33 Managing Our Supply Chain Significant actual and potential negative environ- Responsibly (pages 25-28) mental impacts in the supply chain and actions taken

Social (Category)

Subcategory: Labor Practices and Decent Work

Employment (Material Aspect)

G4-DMA Appendix C (pages 40-41) Disclosure on Management Approach for Aspect

Developing Our Employees and Culture: Promoting a Vibrant Workplace (pages 30-31)

G4-LA1 Total Salaried/Hourly New Hires in Not applicable: Total number and rates of new employee hires 2015 = 462 Region - nearly and employee turnover by age, gender, and Female = 179, Male = 283 all employees are region Under 30 = 227, 30-39 = 106, 40-49 U.S. based = 80, 50+ = 49

Total Turnover in 2015 = 408 Female = 180, Male = 228 Under 30 = 139, 30-39 = 109, 40-49 = 85, 50+ = 75

G4-LA2 2015 Annual Report and Form Benefits provided to full-time employees that are 10-K (Altria.com) (page 46) not provided to temporary or part-time employees, by significant locations of operation Can’t Beat the Experience: Com- pensation & Benefits (Altria.com) (Altria salaried & PM USA-hourly)

Labor/Management Relations (Material Aspect)

G4-DMA Appendix C (pages 40-41) Disclosure on Management Approach for Aspect

Developing Our Employees and Culture: Maintaining Strong Labor Relations (page 32)

G4-LA4 Per collective agreements, no Minimum notice periods regarding operational notice is required. changes, including whether these are specified in collective agreements

49 Altria: 2015 Corporate Responsibility Progress Report | GRI G4 Content Index Specific Standard Disclosures

DMA and Page Omissions External Description Indicators Assurance

Occupational Health and Safety (Material Aspect)

G4-DMA Developing Our Employees and Disclosure on Management Approach for Aspect Culture (page 34)

G4-LA5 Developing Our Employees and Percentage of total workforce represented in Culture (page 34) formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs

G4-LA6 Developing Our Employees and Not applicable: Type of injury and rates of injury, occupational Culture (page 34) Region - nearly diseases, lost days, and absenteeism, and total all employees are number of work-related fatalities, by region and Zero fatalities in 2015. U.S. based by gender

Training and Education (Material Aspect)

G4-DMA Developing Our Employees and Disclosure on Management Approach for Aspect Culture (page 32)

G4-LA9 We currently report overall training Average hours of training per year per employee, by annual spend. by gender and by employee category

Developing Our Employees and Culture (page 32)

G4-LA10 Developing Our Employees and Programs for skills management and lifelong Culture (page 32) learning that support the continued employability of employees and assists them in managing career endings

G4-LA11 Developing Our Employees and Percentage of employees receiving regular Culture (page 32) performance and career development reviews, by gender and by employee category

Diversity and Equal Opportunity (Material Aspect)

G4-DMA Developing Our Employees and Disclosure on Management Approach for Aspect Culture (page 31)

Appendix C (pages 40-41)

G4-LA12 Developing Our Employees and Not applica- Composition of governance bodies and break- Culture (page 31) ble: Significant down of employees per employee category and locations of by significant locations of operation Corporate Governance (Altria. operations-nearly com) all employees are U.S. based 2015 Proxy Statement (Altria. com) (pages 64-69)

Equal Remuneration for Women and Men (Material Aspect)

G4-DMA Developing Our Employees and Disclosure on Management Approach for Aspect Culture (page 31)

Appendix C (pages 40-41)

50 Altria: 2015 Corporate Responsibility Progress Report | GRI G4 Content Index Specific Standard Disclosures

DMA and Page Omissions External Description Indicators Assurance

G4-LA13 Our success depends on our abil- Confidentiality Ratio of basic salary and remuneration of women ity to attract, develop, and retain reasons: Salary to men, by employee category, and by significant a diverse and talented workforce. data locations of operation Total compensation can include different elements — base pay, annual cash incentives, long-term stock and cash incentives, and benefits. We want to provide total compensation packages between the 50th and 75th percentile of our peer companies to recognize all employees for their outstanding work. Additional information on our progress on diversity and inclusion is within the Develop- ing Our Employees and Culture section of the Report.

Supplier Assessment for Labor Practices (Material Aspect)

G4-DMA Managing Our Supply Chain Disclosure on Management Approach for Aspect Responsibly (pages 24-29)

Appendix C (pages 40-41)

G4-LA15 Managing Our Supply Chain Significant actual and potential negative impacts Responsibly (page 28) for labor practices in the supply chain and actions taken

Labor Practices Grievance Mechanisms (Material Aspect)

G4-DMA Appendix C (pages 40-41) Disclosure on Management Approach for Aspect

Managing Our Supply Chain Responsibly (pages 24-29)

Developing Our Employees and Culture (page 30)

Code of Conduct (Altria.com) (pages 16-21)

G4-LA16 Compliance & Integrity (Altria. Number of grievances about labor practices filed, com) addressed, and resolved through formal grievance mechanisms Code of Conduct (Altria.com) (page 47)

Subcategory: Human Rights

Investment (Material Aspect)

G4-DMA Managing Our Supply Chain Disclosure on Management Approach for Aspect Responsibly (page 24)

Appendix C (pages 40-41)

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DMA and Page Omissions External Description Indicators Assurance

G4-HR1 Managing Our Supply Chain Total number and percentage of significant in- Responsibly (pages 25-28) vestment agreements and contracts that include human rights clauses or that underwent human Supplier Code of Conduct (Altria. rights screening com) (page 7)

Code of Conduct (Altria.com)

Human Rights Framework (Altria. com)

Non-Discrimination (Material Aspect)

G4-DMA Developing Our Employees and Disclosure on Management Approach for Aspect Culture (pages 30-31)

Appendix C (pages 40-41)

G4-HR3 Compliance & Integrity (Altria. Total number of incidents of discrimination and com) corrective actions taken

Freedom of Association and Collective Bargaining (Material Aspect)

G4-DMA Managing Our Supply Chain Disclosure on Management Approach for Aspect Responsibly (pages 24-25)

Appendix C (pages 40-41)

G4-HR4 Managing Our Supply Chain Operations and suppliers identified in which the Responsibly (page 25) right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights

Child Labor (Material Aspect)

G4-DMA Managing Our Supply Chain Disclosure on Management Approach for Aspect Responsibly (pages 24-26)

Appendix C (pages 40-41)

G4-HR5 Managing Our Supply Chain Operations and suppliers identified as having Responsibly (pages 24-26) significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor

Forced and Compulsory Labor (Material Aspect)

G4-DMA Managing Our Supply Chain Disclosure on Management Approach for Aspect Responsibly (pages 24-26)

Appendix C (pages 40-41)

G4-HR6 Managing Our Supply Chain Operations and suppliers identified as having sig- Responsibly (pages 24-26) nificant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor

Supplier Human Rights Assessment (Material Aspect)

G4-DMA Managing Our Supply Chain Disclosure on Management Approach for Aspect Responsibly (pages 25-28)

Appendix C (pages 40-41)

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DMA and Page Omissions External Description Indicators Assurance

G4-HR11 Managing Our Supply Chain Significant actual and potential negative human Responsibly (pages 25-28) rights impacts in the supply chain and actions taken

Human Rights Grievance Mechanisms (Material Aspect)

G4-DMA Managing Our Supply Chain Disclosure on Management Approach for Aspect Responsibly (pages 24-28)

Appendix C (pages 40-41)

G4-HR12 Compliance & Integrity (Altria. Number of grievances about human rights com) impacts filed, addressed, and resolved through formal grievance mechanisms Code of Conduct (Altria.com) (pages 18-21)

Subcategory: Society

Local Communities (Material Aspect)

G4-DMA Appendix C (pages 40-41) Disclosure on Management Approach for Aspect

Developing Our Employees and Culture (page 33)

Investing in Communities (Altria. com)

G4-SO1 Developing Our Employees and Percentage of operations with implemented local Culture (page 33) community engagement, impact assessments, and development programs Investing in Communities (Altria. com)

Anti-Corruption (Material Aspect)

G4-DMA Our Approach: Governance & Disclosure on Management Approach for Aspect Oversight (page 10)

G4-SO3 Compliance & Integrity (Altria. Total number and percentage of operations com) assessed for risks related to corruption and the significant risks identified Code of Conduct (Altria.com)

G4-SO4 Our Approach (page 10) Communication and training on anti-corruption policies and procedures Compliance & Integrity (Altria. com)

Code of Conduct (Altria.com) (pages 33, 40, 62-63)

Public Policy (Material Aspect)

G4-DMA Disclosures & Transparency Disclosure on Management Approach for Aspect (Altria.com)

G4-SO6 Disclosures & Transparency Total value of political contributions by country (Altria.com) and recipient/beneficiary

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DMA and Page Omissions External Description Indicators Assurance

Anti-Competitive Behavior (Material Aspect)

G4-DMA Our Approach: Governance & Disclosure on Management Approach for Aspect Oversight (page 10)

G4-SO7 2015 Annual Report and Form Total number of legal actions for anti-competitive 10-K (Altria.com) (pages 22-29) behavior, anti-trust, and monopoly practices and their outcomes

Compliance (Material Aspect)

G4-DMA Our Approach: Governance & Disclosure on Management Approach for Aspect Oversight (page 10)

G4-SO8 2015 Annual Report and Form Monetary value of significant fines and total 10-K (Altria.com) (pages 22-29) number of non-monetary sanctions for non-compliance with laws and regulations

Supplier Assessment for Impacts on Society (Material Aspect)

G4-DMA Managing Our Supply Chain Disclosure on Management Approach for Aspect Responsibly (pages 24-26)

Appendix C (pages 40-41)

G4-SO10 Managing Our Supply Chain Significant actual and potential negative impacts Responsibly: Social Compliance on society in the supply chain and actions taken Audits (page 25)

Grievance Mechanisms for Impacts on Society (Material Aspect)

G4-DMA Our Approach: Governance & Disclosure on Management Approach for Aspect Oversight (page 10)

G4-SO11 Our Approach (page 10) Number of grievances about impacts on society filed, addressed, and resolved through formal Managing Our Supply Chain grievance mechanisms Responsibly (pages 25-28)

Compliance & Integrity (Altria. com)

Subcategory: Product Responsibility

Customer Health and Safety (Material Aspect)

G4-DMA Reducing the Harm of Tobacco Disclosure on Management Approach for Aspect Products (page 14)

Appendix C (pages 40-41)

G4-PR1 Reducing the Harm of Tobacco Percentage of significant product and service Products (page 14) categories which health and safety impacts are assessed for improvement Tobacco Harm Reduction (Altria. com)

G4-PR2 Marketing Responsibly (page 23) Total number of incidents of non-compliance with regulations and voluntary codes concerning the Reducing the Harm of Tobacco health and safety impacts of products and ser- Products (pages 14-15) vices during their life cycle, by type of outcomes

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DMA and Page Omissions External Description Indicators Assurance

Product and Service Labeling (Material Aspect)

G4-DMA Marketing Responsibly (pages Disclosure on Management Approach for Aspect 20-22)

Appendix C (pages 40-41)

G4-PR3 PM USA: Our Products & Ingredi- Type of product and service information required ents (PM USA.com) by the organization’s procedures for product and service information labeling, and percentage of PM USA: Smoking & Health Issues significant product and service categories subject (PM USA.com) to such informational requirements

PM USA: Smokeless Tobacco & Health Issues (PM USA.com)

USSTC: Our Products & Ingredi- ents (USSTC.com)

USSTC: Smokeless Use & Health Issues (USSTC.com)

John Middleton: Making Our Cigars & Ingredients (John Mid- dleton.com)

John Middleton: Smoking & Health (John Middleton.com)

G4-PR4 Marketing Responsibly: MSA Total number of incidents of non-compliance Performance Indicator (page 23) with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes

G4-PR5 Marketing Responsibly (page 22) Results of surveys measuring customer satisfaction

Marketing Communications (Material Aspect)

G4-DMA Marketing Responsibly (pages Disclosure on Management Approach for Aspect 20-23)

Appendix C (pages 40-41)

G4-PR6 Combating Illicit Trade (Altria. Sale of banned or disputed products com)

G4-PR7 Marketing Responsibly : MSA Total number of incidents of non-compliance Performance Indicator (page 23) with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship, by type of outcomes

Compliance (Material Aspect)

G4-DMA Our Approach: Governance & Disclosure on Management Approach for Aspect Oversight (page 10)

G4-PR9 2015 Annual Report and Form Monetary value of significant fines for non-com- 10-K (Altria.com) (pages 22-29) pliance with laws and regulations concerning the provision and use of products and services

55 Altria: 2015 Corporate Responsibility Progress Report | GRI G4 Content Index